ArmInfo. On October 19, the Armenian National Assembly amended the Law "On Financial Equalization" in the second and final reading. Deputy Minister of Territorial Administration and Development Vache Terteryan said that the bill aims to ensure fair distribution of the transfers from the budget among the communities of Armenia.
He noted that the law was adopted in 1998 and it was based on two major principles - population size and capacities of the communities' revenues, while the expenditure proportions were neglected. Eventually, this resulted in imbalance of transfers. In particular, some villages have more opportunities to secure income than the small towns. "The new edition of the law implies detailed calculation ratios for the needs of villages and towns, which will also take into account the number of pensioners and children under 16," Terteryan said. He added that financial equalization will also take into consideration such factors as location of villages, particularly, the mountain and high-mountain areas will receive more funds for fuel and food within the framework of public services.
According to the bill, starting from 2017, the annual budget of any municipality shall not be lower than the budget of the previous year. The deputy minister stressed that the total amount of transfers for 2017 will be no less than in 2016. Moreover, the increase will make up 1 bln AMD (nearly $2.1 mln). The funds will be spent as per their intended purpose.
Earlier, Minister of Territorial Administration David Lokyan said that the amendments envisage additional transfers from the budget (960 mln AMD) in 2017. The transfers for 2016 make up nearly 47 bln AMD. 4% of the budget revenues is spent on these transfers. If the budget revenues are increased in 2017, the transfers will also grow. "The transition to the new system will be gradual and its full-scale introduction is scheduled for 2020," Lokyan said.