Communities Finance Officers Association
CELoG Quarterly report October 1-December  31 2014 CELoG Quarterly report October 1-December  31 2014

There have been several political developments within the reporting period as well as between the submission of the project proposal and awarding that have had direct or indirect influence on the process of implementation of the decentralization reform.

The first major change that took place on April 3rd, 2014 when Prime Minister Tigran Sargsyan resigned and a new Cabinet was formed by the newly-appointed Hovik Abrahamyan. Despite the fact that both former and current Prime Ministers are from the same political party and the general policy of the authorities did not change, the change in the political leadership had an impact on the process of implementation of reforms. Mainly, the decentralization reform suffered yet another delay, which was prolonged by another change initiated by the current Prime Minister Hovik Abrahamyan. In November 2014, the Ministry of Territorial Administration and the Ministry of Emergency Situations were merged. Armen Yeritsyan, the former Minister of Emergency Situations was appointed the new Minister of Territorial Administration and Emergency Situations. This resulted in another delay in the implementation of the decentralization reform, particularly in the announcement of the launch of the communities’ consolidation process.

Another more global process that had an impact on Armenia in general and on the reform implementation process in particular was the Ukraine Crisis that affected the economic situation in Armenia through the sanctions against Russia, due to the country’s economic dependence on Russia. The significant decrease of oil prices has also affected the Russian economy which in its turn has resulted in economic stagnation in Armenia where the Russian economic and political presence is significant.

The economic and political influence of Russia in Armenia has also grown after Armenia decided to join the Russia-led Customs Union on September 3rd, 2013 and joined the Eurasian Economic Union on January 2nd, 2015. There is currently an increase in the prices of products imported from non-EU countries, which also has a negative impact on the Armenian economy.

The stagnation in the economy forced the Armenian authorities to direct all available resources towards the stabilization of the financial market since a devaluation of the Armenian Dram by between 15-20% was registered.

Since Armenia is an import-based economy, the devaluation of the Armenian Dram resulted in significant inflation and the Government is currently seeking ways out of the current crisis.

Overall the political context doesn’t have an essential impact on the project for it was uncertain when the green light for the active start of the reform would be given. However this situation allowed the CELoG Consortium to be more active before the state initiated the reform (i.e. set up the Consortium, establish contact with target communities and other partners).

However, all activities planned as part of the Annual Work Plan were accomplished within the established timeframes.