ArmInfo.In Armenia, the terms of the law on financial equalization will be extended by two of the year.
The relevant amendments to the law were approved at a parliamentary meeting on December 5 in the second and final reading.
Presenting the draft amendments, the Deputy Minister of Territorial Administration and Infrastructures of the Republic of Armenia Vache Terteryan said that from January 1, 2020 the deadlines for applying the provisions of the law expire, which may lead to the fact that about 253 communities in their budgets may be missed over 5 billion drams. Most communities are not yet able to solve their problems with their own incomes. For this reason, it is proposed to extend the duration of the law until January 1, 2021. From 2022, the law will be fully applied. From that time on, financial assistance will be provided to the most vulnerable communities and border regions. The deputy minister reminded that next year, an amount of 55.3 billion drams is provided for subsidies to the country's communities. With the annual growth of the subsidy fund by an average of 8-10 billion drams, many problems of local self-government bodies will be able to find their solution. The main task of the government, the deputy minister noted, is to promote community service, and in this context, deductions are set that satisfy the minimum needs of the communities, local governments should raise the remaining funds from the income of the communities. Vache Terteryan also reported on the upcoming reform of the local government system, which, first of all, implies the enlargement of about 400 communities, which will allow them to successfully cope with challenges, ensure the implementation of the revenue side of their budgets, and thereby reduce the dependence on subsidized contributions.
It should be noted that the law is aimed at reducing the difference between the financial capacities of municipalities for their proportional development, as well as creating opportunities to carry out costs in a minimum amount in all municipalities for local authorities to fulfill their responsibilities. The principles of financial equalization are mitigation of the inequality between the financial capacities of municipalities, gratuitousness and inappropriate grants provided to the municipalities from the state budget, preservation of the freedom and autonomy of municipalities in the exercise of their powers and the use of financial resources. The law also determines the minimum total amount of subsidies provided from the state budget, approval by individual municipalities of the amount of subsidies allocated from the state budget.