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Quasi-fiscal activities, hidden government subsidies, and fiscal adjustment in Armenia

Author

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  • Freinkman, Lev
  • Gyulumyan, Gohar
  • Kyurumyan, Artak

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.

Suggested Citation

  • Freinkman, Lev & Gyulumyan, Gohar & Kyurumyan, Artak, 2002. "Quasi-fiscal activities, hidden government subsidies, and fiscal adjustment in Armenia," MPRA Paper 10064, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:10064
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    File URL: https://mpra.ub.uni-muenchen.de/10064/1/MPRA_paper_10064.pdf
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    References listed on IDEAS

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    1. Freinkman, Lev M. & Starodubrovskaya, Irina, 1996. "Restructuring of enterprise social assets in Russia : trends, problems, possible solutions," Policy Research Working Paper Series 1635, The World Bank.
    2. Aleh Tsyvinski & Martin Petri & Günther Taube, 2002. "Energy Sector Quasi-Fiscal Activities in the Countries of the Former Soviet Union," IMF Working Papers 02/60, International Monetary Fund.
    3. Brixi, Hana Polackova & Ghanem, Hafez & Islam, Roumeen, 1999. "Fiscal adjustment and contingent government liabilities : case studies of the Czech Republic and Macedonia," Policy Research Working Paper Series 2177, The World Bank.
    4. William Easterly, 1999. "When is fiscal adjustment an illusion?," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 55-86, April.
    5. Balázs Horváth, 1998. "Achieving Stabilization in Armenia," IMF Working Papers 98/38, International Monetary Fund.
    6. Pinto, Brian & Drebentsov, Vladimir & Morozov, Alexander, 2000. "Give growth and macroeconomic stability in Russia a chance - harden budgets by eliminating nonpayments," Policy Research Working Paper Series 2324, The World Bank.
    7. Alam, Asad & Sundberg, Mark, 2002. "A decade of fiscal transition," Policy Research Working Paper Series 2835, The World Bank.
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    Citations

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    Cited by:

    1. World Bank, 2005. "Belarus : Window of Opportunity to Enhance Competitiveness and Sustain Economic Growth, A Country Economic Memorandum (CEM) for the Republic of Belarus, Volume 1, Main Report," World Bank Other Operational Studies 8353, The World Bank.
    2. Julian Lampietti, 2004. "Power's Promise : Electricity Reforms in Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 14936.
    3. Mali Chivakul & Robert C York, 2006. "Implications of Quasi-Fiscal Activities in Ghana," IMF Working Papers 06/24, International Monetary Fund.
    4. World Bank, 2007. "Armenia - Labor Market Dynamics : Volume 2. Main Report," World Bank Other Operational Studies 7846, The World Bank.

    More about this item

    Keywords

    Armenia; subsidies; fiscal adjustment; quasi-fiscal deficit; losses in the energy sector;

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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