By Elen Muradyan
Despite increased taxes and fees in Yerevan in 2024, the capital’s budget has underperformed, and programs deemed priorities have largely gone unimplemented. This is according to a report on Yerevan’s 2024 budget performance published today by the Luys Foundation, a think tank of the opposition-aligned Republican Party of Armenia.
Revenue: Increased Rates, Modest Growth
For the 2024 fiscal year, city authorities sharply increased local fees and charges, prompting a negative public reaction. Yerevan’s actual budget revenue amounted to 116.7 billion drams (roughly $300 million), which, despite these measures, is only 1.6% higher than the previous year’s figure and 6.4% lower than the approved budget’s planned indicator.
The report notes that only the increase in “taxes and fees” contributed to budget revenue growth, while the other two important components—”official grants” and “other income”—decreased significantly.
According to the analysis, local fee revenues increased 4.1 times compared to the previous year. Real estate tax revenues also increased significantly by 39.3%, due to a 42.9% increase in the property tax base compared to 2023. Parking fee rates increased by 79.1%.
The report authors find it noteworthy that revenues from these three income types increased by 19.7 billion drams ($50 million) compared to the previous year, while the total volume of own revenues increased by only 8.3 billion drams ($21 million). Own revenues refer to the city’s self-generated income from local taxes, fees, and other sources under direct municipal control, distinct from transfers from the central government or international organizations.
Expenditures: Increasing Bonuses, Underperforming Priority Programs
According to the report, Yerevan’s 2024 budget expenditures amounted to 113.7 billion drams ($290 million), exceeding the previous year’s figure by 2.3%. However, this number is 5.5% less than the adjusted plan and 9.0% less than the initial indicator of the approved budget. Both the current and capital expenditures underperformed.
The foundation’s analysis highlighted the fact that expenditures for bonuses, monetary incentives, and special payments increased more than twofold compared to 2023, and 6.5 times over the past two years.
The report notes that all budget expenditure groups showed underperformance relative to the adjusted plan.
Incomplete Programs
The foundation’s analysis reveals low performance for several key programs. The authors find it particularly concerning that several crucial programs have not been implemented at even half of their planned level. These programs include:
- “Implementation of Design Works” (performance: 39.9%)
- “Restoration and Maintenance of Bridge Structures” (38.3%)
- “Street Maintenance and Operation” (13.0%)
- “Furnishing of Streets, Squares, and Parks” (34.7%)
- “Yerevan City Lighting” (39.2%)
According to the report, two programs deserve special attention because of their high public resonance. The first is the “Construction of Yerevan Metropolitan Infrastructure” program, which has zero performance. The authors note this is particularly surprising since city authorities consistently announce the imminent commissioning of the “Ajapnyak” metro station.
The second is the “Construction and Renovation of Preschool Educational Institutions with State Support” program, which, according to the report, achieved only 35.0% performance. The foundation’s assessment finds this equally surprising since the construction of schools and kindergartens has been declared as a priority government’s activity.
Planning and Budget Policy Issues
The report states that the 2024 budget was initially planned with a deficit of 300 million drams ($765,000), but the adjusted plan increased this figure to 7.1 billion drams ($18 million). In actual results, the budget was executed with a surplus of 3 billion drams ($7.65 million).
According to the foundation’s researchers, a similar situation was recorded in 2023, when the budget again was executed with a surplus despite the planned deficit. According to the “Luys” Foundation’s analysis, this indicates that the city authorities are failing to resolve systemic problems in the budget planning process.
The report authors conclude that despite the sharp increase in tax and fee rates, city authorities are unable to implement the planned priority programs, raising questions about the effectiveness of the city’s financial management.
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