IMF | CCAMTAC

Macroeconomic Frameworks (April 6–12, 2024). This mission focused on advancing a semi-structural gap model to boost the Ministry of Finance's forecasting frameworks. Significant progress was made, enhancing the tool and its documentation while analyzing its policy-–relevant properties. The ministry expanded the model to include aggregate demand and a basic fiscal block, enabling better identification of shocks and risks. This advancement will help craft policies to manage business cycles and support Armenia's macroeconomic stability.

Forecasting tool development (November 27 – December 8, 2023).
The mission conducted a two-week training in semi-structural gap models with the core forecasting team of the Ministry of Finance of the Republic of Armenia. The training sessions included hands-on activities covering essential topics, such as the development and calibration of a simplified semi-structural model, analysis of its properties, filtering and simulation. This training mission is part of a long-term project on developing a new core forecasting tool that will support the republican budget process.

Scoping mission (July 7 – 21, 2023).
ICD-led scoping mission was conducted to the Ministry of Finance of Armenia to lay the groundwork for implementing a semi-structural gap model. The aim is to help enhance the Ministry’s medium-term macroeconomic forecasting capabilities.

Corporate Income Tax Gap Prediction (June 30–July 4, 2024). This mission assisted Armenia’s State Revenue Committee to predict the corporate income tax gap using a bottom-up approach based on unaudited corporate income tax (CIT) declarations filed for the income year 2023. These activities, coupled with the SRC’s quality data, enabled the CIT gap to be both estimated and predicted.

Machine Learning Model (MLM) (May 13–14, 2024). The purpose of this virtual activity was to train analysts at Armenia’s State Revenue Committee (SRC) to apply a machine learning model (MLM) to select cases for audits for the income year 2023 prior to publication of the SRC’s annual list of corporations to be audited. The model had been developed during an earlier mission to estimate an average corporate income tax gap. The training was delivered successfully, and the requisite audit case list produced to target, more effectively, potential revenue risks.

Company Income Tax Gap Estimation (March 11–22, 2024). Following a request by the Armenian authorities this mission provided an estimate of the company income tax gap using data from the State Revenue Committee’s (SRC) tax audit program. During the visit a machine learning model was developed for use by the SRC in selecting future cases for audit. Preliminary results from the model suggested that audit revenue raised can be significantly increased for companies known to exhibit risk when compared with the SRC’s existing risk scoring process.

Tax Administration (June 6 – 21, 2023). 

This capacity development (CD) mission advised the State Revenue Committee of Armenia (SRC) on eCommerce tax control mechanisms to address tax non-compliance facilitated through this channel (the e- commerce risk). The mission workshopped the IMF’s Compliance Risk Management (CRM) Framework to understand the patterns, trends, and drivers of the e-commerce risk in the Armenian context. The SRC completed a draft intelligence scan, risk assessment and compliance improvement plan. In addition, the expert took the opportunity to meet with other CD providers/international organizations, a provider of taxation services and the Ministry of Finance.

Tax Administration (February 13 – 24, 2022).

The purpose of this CCAMTAC in-country assignment was to advise the State Revenue of the Republic of Armenia (SRC) on the design, creation, and implementation of international good practices for the identification of international tax risks and transfer pricing risk analysis. A series of workshops were provided to the SRC’s Transfer Pricing Unit (TPU) on the use of systemic risk approaches to identify and assess non-compliant multi-national enterprises. A nine step ‘roadmap’ plan was recommended to implement a range of practice improvements for the TPU.

Compliance Risk Management (March 1 - April 30, 2021)

The expert assisted the authorities to strengthen revenue administration management and governance arrangements. One focus of the reforms in revenue administration is on addressing tax non-compliance. The Armenia State Revenue Committee (SRC) has started implementing compliance risk management (CRM) methodologies in their organization. The TA has supported the authorities through an innovative “virtual help desk” approach. The project supports the ongoing development of the CRM strategy and provides advice on aspects of CRM governance and the implementation of SRC’s roadmap plan.

Strengthening the fiscal risk statement (April 15-26, 2024). The mission supported the Armenian Ministry of Finance in strengthening the fiscal risk statement (FRS) to better inform fiscal decisions, improve coordination of the fiscal risk function and build staff capacity. The main output was an updated structure for the 2024 FRS with guidance on methods to enhance the clarity of transmission channels for major fiscal risks. To support this process, a two-page summary brief on the key messages was prepared to provide key messages for senior management attention. A third output delivered by the mission was an outline of a fiscal risk register (FRR) to support the enhanced quantification of fiscal risks for future versions of the FRS.

Functional Review of the Ministry of Finance (February 27–11 March, 2024). CCAMTAC supported an IMF’s Fiscal Affairs Department led mission to undertake a review of the functions and related organizational structure of the ministry identifying any gaps and overlaps to ensure a high performing finance ministry. The review was undertaken across four broad areas: (i) functional strength to deliver PFM objectives; (ii) effectiveness of inter-departmental coordination; (iii) adequacy of staff skills and resources, and (iv) adequacy of analytical tools and IT systems.

Review and update of the borrowing framework (September 5 –15, 2023).
CCAMTAC supported an IMF-FAD-led remote mission to develop a concept note on the readiness of municipal borrowing in Armenia with a specific focus on Yerevan municipality. International experience suggests that core PFM processes at both the municipal level and within the Ministry of Finance need to be well developed before municipal borrowing should be considered outside of general government. The mission developed a roadmap for possible capacity development support which could be supported by development partners.

Government Financial Management Information System (GFMIS) design and implementation (August 1 –18, 2023).
The mission assessed the draft tender terms of reference (ToR) for the GFMIS to provide recommendations on possible improvements and adjustments. The authorities can use the modular feedback as a reference as they enhance the draft ToR. Follow-up support was offered to support this process and could involve an in-country mission to develop the conceptual design document and/or remote support to quality assure the revised ToR.

Budget Preparation (July 22 – September 2, 2022).

The virtual TA mission assisted the Ministry of Finance to define revised budget processes arising from its decisions to reformulate the structure and functions of its Budget Department, consistent with previous FAD advice. The IMF expert supported the ministry in broader budget reforms and contributed to strengthening policy-based budget preparation and the credibility of the medium-term budget framework.

Fiscal Risks Management (July 14 – 25, 2022)

The mission worked with the authorities to extend their analysis of the long-term fiscal risks from climate change by introducing and applying a quantitative macroeconomic approach. The mission team provided guidance on how this analysis can be incorporated into the authorities’ annual fiscal risk statements. The CD support was delivered on a hybrid basis, with most of the mission team operating in the country.

Reformulation of Budget Department (November 1, 2021 - February 25, 2022)

The CCAMTAC regional advisor and a short-term expert have been supporting the Ministry of Finance in clarifying the functions of, and restructuring, the Budget department. This is intended to pave the way for an improvement in the capacity of the department to enable it to lead and support effectively the further development of program-based budgeting, including the new rolling baseline system, implementation of the revised mandatory/discretionary distinction and fulfilment of the Ministry's gatekeeping role in the new public investment management (PIM) framework.

Enhancing Budget Preparation, (July 26 – August 31, 2021).

The team supported the Ministry of Finance of Armenia in piloting the revised distinction between mandatory and discretionary expenditures to programs implemented by the state entity. The mission also provided training to staff in using the methodology, which provides a more precise set of criteria to determine the mandatory categorization of program measures, such as (i) whether a service provided by the program measure is mandatory or discretionary; (ii) the degree of alignment with the government’s strategic objectives; and (iii) the degree of expenditure flexibility in providing the service. A successful application of this methodology is expected to significantly reduce the share of mandatory expenditures in the state budget and, therefore, increase expenditure flexibility in the state budget and, therefore, increase expenditure flexibility in the state budget.

Budget Preparation, (June 28 – July 30, 2021)
The purpose of the activity is to assist the Ministry of Finance (MoF) to pilot the revised distinction between mandatory and discretionary expenditures. An earlier FAD mission in October 2020 recommended a methodology for identifying, mapping, and documenting mandatory expenditures, and distinguishing them from discretionary expenditures.

GFS and PSDS mission (December 5 – 15, 2023).

The mission assisted the authorities in finalizing a comprehensive list of public sector units and identifying data sources that could be exploited for the compilation of GFS and PSDS for the expanded general government sector. The mission also provided several tailored trainings and practical sessions with the objective of improving the capacity of the authorities to compile and disseminate GFS and PSDS. The GFS and PSDS compilers from the Ministry of Finance as well as staff from the Statistical Committee of Armenia and the Central Bank of Armenia participated in these sessions. Furthermore, upon the request of the authorities, the mission advised on several methodological issues. The mission met with the Minister and Deputy Ministers of Finance to discuss the mission outcome and recommendations.

Strengthening Government Finance Statistics (GFS) compilation and dissemination (September 27 – October 8, 2021).

The mission continued previous work to support the Ministry of Finance of Armenia in compiling and finalizing the list of public sector units. The GFS experts reviewed the sectorization of units and advised on the best approach to sector classification for public sector non-profit organizations. Using the available summary data reports for 2020, the team compiled provisional GFS, broadly following the current compilation approach of the MoF. The mission also provided practical and tailored training with the objective of improving the capacity of the authorities to compile and disseminate GFS.

National Accounts mission (November 13 – 17, 2023).

The mission was a follow-up to a 2022 mission that focused on the methods used to compile balance sheets and financial accounts. The focus was on specific issues identified by the Statistical Committee of the Republic of Armenia with emphasis on improving data quality, addressing data gaps, and examining coherence across the sequence of accounts for which Armenia publishes key accounts.

National Accounts (December 12 – 16, 2022).

The remote TA focused on reviewing the balance sheet, financial account, and other changes in the assets account compiled by the Statistical Committee and providing recommendations to bring these accounts in line with international standards. As a basis for identifying and addressing practical compilation issues, the mission team delivered presentations outlining the current practice of Statistics Canada in the compilation of the national balance sheet and accumulation accounts. Based on the discussions with officials, the mission found several shortcomings and made recommendations for further improvement.

National accounts (June 21-25, 2021)

A remote CCAMTAC technical assistance mission assisted the Statistical Committee of the Republic of Armenia (SCA) in (i) developing institutional sector accounts; and (ii) updating the reference year of the chain-linked GDP estimates at constant prices. The mission provided examples of best practices in balancing the sequence of accounts. These examples and recommendations will help the SCA to finalize the compilation of financial accounts. The mission also reviewed the compilation of constant-price GDP estimates with the current reference year 2008. A new draft chain-linked time series were compiled with the updated reference year 2013.

IRRBB TA support, remote follow up (March 7–September 30, 2024). This mission provided the continued support to the Central Bank of Armenia (CBA) for benchmarking the impact of the interest rate risk in the banking book (IRRBB), based on the Basel framework. This was the second stage of the support provided for CBA following the in-person engagement in April 2024, in Yerevan. CBA has been working with market participants and develop its IRRBB approach further with data collection which started in June 2024 and the impact study aimed to benchmark the overall effects of the IRRBB, standardized approach on the banks and the system as a whole.

Interest Rate Risk in The Banking Book (IRRBB) (March 25–April 2, 2024). This in-person mission conducted in Yerevan, Armenia aimed to support the Central Bank of Armenia (CBA) to conduct an impact study of the Interest Rate Risk in the Banking book (IRRBB). The mission provided technical background to the relevant CBA staff as it relates to IRRBB and included sessions covering definitions, dimensions, risk factors and risk management of IRRBB. Economic value of equity (EVE) and net interest income (NII) measures as outlined under the Basel Standardized methodology formed the basis for discussions during the 7-day long support sessions.

Corporate Governance Guidelines (May 2024). This mission, aimed to provide support for The Central Bank of Armenia (CBA) for the development and implementation of an effective Corporate Governance (CG) guideline aligned with the Basel Corporate Governance Principles for Banks dated July 8, 2015. The mission team worked with CBA stakeholders, assessed the impact and scope of periphery of other regulations and internal procedures, and developed a bespoke guidance applicable to banks in Armenia.