Deputy Minister of Finance Vahan Sirunyan details Armenia’s comprehensive budget reforms for 2025, introducing multi-year budgeting mechanisms, enhanced transparency, and expanded participatory budgeting approaches.
Integration of Multi-Year Budgeting Elements in the Budgetary Process
Integration of a mechanism for transferring capital expenditures to subsequent budgetary years
The draft Law on the State Budget of the Republic of Armenia for 2025 permits the government to finance contractual obligations for capital expenditures undertaken in 2024 but not executed by December 31, 2024, using the actual opening balance of free funds from the 2025 state budget. These provisions will not apply to capital expenditures in the defense sector. The selection and financing of capital expenditures under this mechanism will be regulated by the government.
Inclusion of Information on Multi-Year Obligations in Budget Documents
The government’s explanatory message accompanying the draft Law on the 2025 State Budget includes an annex detailing measures with defined completion dates. This annex provides information on the content, start and end dates, total and remaining costs, and planned 2025 expenses for these measures. This transparency enables the assessment of ongoing and new measures throughout their lifecycle, considering their fiscal impact in subsequent years.
Presentation of Updated Mid-Term Macroeconomic and Fiscal Frameworks in Budget Documents
The draft Law on the 2025 State Budget (the Government’s address) revises the macroeconomic and fiscal frameworks defined in the 2025–2027 Medium-Term Expenditure Framework (MTEF). Previously, revisions were limited to the fiscal framework for the upcoming budget year. This innovation allows the 2025 state budget to be analyzed in the context of mid-term developments and fiscal capacities.
Other Significant Changes in the Budgetary Process
Adjustment and Inclusion of Rent Payments for Assets Owned and Managed by State Government Bodies in Budget Documents
The government’s explanatory message accompanying the draft Law on the 2025 State Budget includes an annex presenting adjusted rental payment estimates for public assets managed by state bodies. This step enhances transparency in the management of public assets and lays the groundwork for improving efficiency and evaluating the real cost of services provided by state bodies.
Setting Budget Expenditure Priorities and Developing Alternative Spending Scenarios
Starting with the 2025 budgetary process, within the framework of budget applications, state bodies will present their expenditure program priorities in line with criteria developed by the Ministry of Finance. They will also develop expenditure policy scenarios involving 5% and 10% reductions in total expenditures. This approach allows for the assessment and prioritization of expenditures based on unified criteria and the development of alternative scenarios to address potential economic and fiscal risks.
Simplification of Budget Document Formats
The draft Law on the 2025 State Budget and accompanying explanatory message simplify the presentation of information on budget programs and performance indicators. These formats will now be visually more accessible and user-friendly for end-users.
Introduction of Budget Program Evaluation Processes
To enhance the effectiveness and utility of budget programs, the Ministry of Finance will continue institutionalizing the regular evaluation of budget programs in 2025. This includes finalizing institutional mechanisms, establishing a methodological framework, and developing necessary human resources. Program evaluations will gradually commence.
Implementation of Participatory Budgeting Processes
The process of providing subventions to communities from the state budget based on participatory budgeting principles will continue in 2025. Existing regulations will be revised and improved to make the process more participatory and transparent, with new communities being engaged. The 2025 state budget draft allocates 1.0 billion AMD for this purpose, compared to 500.0 million AMD in 2024.
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