Selected Issues Papers

This paper evaluates Armenia’s fiscal framework, focusing on fiscal rule design and implementation. Despite the 2018 reforms strengthening the Armenia’s fiscal rules, limitations persist: rules are somewhat procyclical and complex, ex-post enforcement is not legally binding, coverage is restricted to central government, and operational flexibility is limited. Armenia’s fiscal rules have served the country well, but further improvements could be considered. Drawing on international best practices, the paper recommends upgrading fiscal rules to improve countercyclicality, simplify design, broaden coverage, and strengthen transparency and enforcement. Proposed reforms include consolidating expenditure rules, formalizing escape clauses, expanding coverage, and empowering independent oversight.