Quasi-Fiscal Activities, Hidden Government Subsidies, and Fiscal Adjustment in Armenia

Armenian International Policy Research Group Working Paper No. 03/06

38 Pages Posted: 1 Apr 2014

See all articles by Lev Freinkman

Lev Freinkman

National Research University Higher School of Economics (Moscow); World Bank - The International Bank for Reconstruction and Development (IBRD)

Gohar Gyulumyan

World Bank

Artak Kyurumyan

World Bank

Date Written: January 25, 2003

Abstract

This paper aims to develop a detailed analysis of quasi-fiscal deficits and subsidies, and their impact on Armenia’s fiscal performance in the second part of the 90-s. Based on the flow-of-funds approach, we estimate the magnitude of the quasi-fiscal deficits and the incidence of quasi-fiscal subsidies in Armenia, as well as identify main recipients and donors of quasi-fiscal financing. The main finding of the paper is that, while quasi-fiscal deficits in Armenia remain considerable, their recent decline has been the main source of fiscal adjustment in Armenia to date. The paper also shows that the population remains a major ultimate recipient of quasi-fiscal subsidies. Thus, the main distortive impact of quasi-fiscal subsidies is on social policy, not on enterprise restructuring and private sector performance.

Keywords: Armenia, quasi-fiscal transfers, subsidies, fiscal adjustment

JEL Classification: H20, H53, H62, H71

Suggested Citation

Freinkman, Lev and Gyulumyan, Gohar and Kyurumyan, Artak, Quasi-Fiscal Activities, Hidden Government Subsidies, and Fiscal Adjustment in Armenia (January 25, 2003). Armenian International Policy Research Group Working Paper No. 03/06, Available at SSRN: https://ssrn.com/abstract=2403354 or http://dx.doi.org/10.2139/ssrn.2403354

Lev Freinkman (Contact Author)

National Research University Higher School of Economics (Moscow) ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

World Bank - The International Bank for Reconstruction and Development (IBRD) ( email )

Washington, DC 20433
United States

Gohar Gyulumyan

World Bank

PO Box 30577-00100
Menengai Road
Nairobi
Kenya

Artak Kyurumyan

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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