Public Sector Reforms in Armenia:

Achievements and

Challenges Ara Hovsepyan

Armen Khudaverdyan

Setting the Scene First major attempt to analyze the major path of

reforms (1999 – 2005):- Limited publications and trends / factual statistics- Limited study of international experience and its

relevance for Armenia

Assumptions in the beginning:- Overall, positive results of the reforms and

continuing progress, albeit slow.- Moderate level of national ownership of the

reforms, as part of the major policy documents (PRSP, ACS, MTEF).

- Unsustainable without donor assistance.

Current Government Structure 15 ministries, 8 agencies (Tax, Customs,

Cadastre, National Security, Police, State Property Management, Sports, Civic Aviation) and 5 national bodies created by laws (Statistics, Civil Service, Public Utilities, TV&Radio, Economic Competition).

Appr. 7,500 civil servants in total – excl. the service in special bodies (e.g. tax, customs, diplomatic service, etc.).

From 44 ministries in early 1990s down to 23 in 2005; 750 jobs cut in civil service as a result.

Types of Public Services State Service:- Political and Discretionary Post Holders (DPHs, i.e. the

ministers, deputy ministers, advisers, etc.)- Civil Service (i.e. employees of the Government ministries,

regional administrations, agencies and other state bodies)- Special Services (i.e. employees of those Government

bodies that are covered by separate service laws, e.g. police, tax, customs, diplomatic, military, etc.)

Municipal Service (i.e. employees of local self-government bodies)

“Public Service” (public utilities, gas, roads, water, etc.) and other public employees (schools, hospitals, etc.)

Major Directions of Reforms Structural and functional reforms of the public

administration system – led by the Public Sector Reforms Commission (PSRC)

Establishment of the civil service:- The Civil Service Council (CSC) leads and regulates the

field- Heads of Staff and HR departments implement the policies- Academy of Public Administration specializes as

academic / training institution for the civil service

Reforms of the Public financial management system

Main Problems Corruption at the national and regional level remains

as an obstacle to the effective operation of governance systems.

Very low levels of salaries for public employees encourage corrupt practices to supplement income.

Formal institutions have insufficient strength to act as a check on the informal family/regional/power networks and on personal ambitions.

Influence of the power agencies compromise the government’s willingness to confront vested interests and to deliver effective pro-poor policies.

Main Problems cont’d Limited policy making and proper service delivery

capacity at all levels of government (central, regional and local). Still confused government structure leading to overlap and duplication of functions. Lack of openness of government operations and lack of involvement of civil society organizations.

Poor performance of the civil service as a result of weak incentives package, lack of job security, clear personnel policy, absence of career and merit-based pay structures, proper appraisal system and career development strategy.

Incomplete legal framework that does not provide clear definition of state service, clear separation between civil servants and political posts and restraints transfers within the public service.

Challenges Governance system / administrative management should be in

harmony with the:- Political system of the country - Major national policy documents (e.g. PRSP, ACS)

Streamlining of the Public Service in Armenia by means of:- Adoption of relevant pieces of legislation- Delineation between political and administrative service (e.g.

strengthening the Heads of Staff posts)

Effective decentralization of functions to the local government bodies (communities / inter-community unions), in particular, following the new Amendments to the Constitution.

Effective monitoring system of the Government policy implementation by introducing performance-based budgeting.

Challenges cont’d Transparency and openness in Government activities and

improving the links with the civil society.

Structural and functional reforms should be supplemented by improvements in HR management.

Improving the performance of the state bodies in charge with leading the reforms agenda, in particular, the PSRC.

Dependence on technical assistance from donor organizations: Armenia’s re-classification as a MIC will have consequences for donor programmes.

Recommendations Enhance political commitment and country leadership for

further reforms to achieve better performing public administration system.

Intensify national resources to improve the incentives base and performance evaluation system within the public service.

Use extensively the international and national best practices in various aspects of public administration (e.g. UK on pay & grading, CBA on HR, etc.).

Ensure more harmonized and co-ordinated donors assistance, in particular, to improve capacity in policy-making, implementation and service delivery.

Conclusion Overall, the assumptions in the beginning confirmed:- positive trends, in particular, in comparison to other

countries in the region;- growing buy-in within the Government, especially, from

senior civil servants of the need for reforms;- Donor presence in the PA sector still needed

More research and national debate needed around the following questions:

- What is the philosophy behind Armenia’s civil service – does the current model (based on UK’s) fit into Armenian mentality and realities?

- What are alternative models or best practices? e.g. European or US models (more politicized civil service in comparison to Anglo-Saxon)