Accountability for Grants of the Government (AM0028)

Issue subject to regulation: The processes for allocating grants from the State Budget of the Republic of Armenia are regulated by the Law of the Republic of Armenia “On the State Budget”, Law of the Republic of Armenia “On procurement”, Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003 “On approving the procedure for allocating subsidies and grants from the State Budget of the Republic of Armenia to legal persons” and Decree of the President of the Republic of Armenia NH-118-N of 19 May 2008 “On approving the procedure for allocating as grants the funds allocated to the Staff of the President of the Republic of Armenia from the State Budget of the Republic of Armenia”. The procedures for releasing information with regards to organizations having participated and recognized as winners in competitions organized for the provision of grants by the implementing agency, for submitting reports by organizations implanting grant projects and publication of these reports by the implementing agency are not defined.; Main Object: Raise the level effectiveness of using grants allocated from the State Budget of the Republic of Armenia, enhance access to information on procedures for allocating grants and project implemented under the grants, the goal of a grant, accountability and transparency of the field.; Brief description of commitment: Posting on the official website of the respective government agency the list of organizations having participated and recognized as winners in the competition for obtaining grants from the State Budget, as well as the reports on projects implemented under the grants.; OGP challenge addressed by the commitment: More efficient management of public resources, Enhancement of public confidence, Enhancement of public integrity.; Relevance to OGP values: Publication of reports on projects implemented under grants being provided from the State Budget will promote public accountability, which will help raise the level of effectiveness of spending and targeted use of funds of the State Budget. Publication of the list of organizations having participated and recognized as winners in the competition for obtaining grants from the State Budget will leads to increase in the level of access to information.; Ambition: Efficient management of funds of the State Budget, qualitative change in grant projects being implemented, increase in accountability, transparency and confidence.

2. Transparency of state grants

Commitment Text:

Title: Accountability of grants from the government: Ensuring transparency and accountability of allocation of grants from the State Budget of the Republic of Armenia

Posting on the official website of the respective government agency the list of organizations having participated and recognized as winners in the competition for obtaining grants from the State Budget, as well as the reports on projects implemented under the grants. Main objective is to raise the level of effectiveness of using grants allocated from the State Budget of the Republic of Armenia, enhance access to information on procedures for allocating grants and on projects implemented under the grants, the goal of a grant, accountability and transparency of the field.

The activities under this commitment are as follows:

1. Drafting amendments and supplements to legal acts defining the procedures for provision of grants and discussion thereon with interested representatives of civil society (Sep16-Dec 16).

2. Coordination of legal acts with interested agencies and adoption thereof (Jan-May 17).

3. Posting reports of organization having obtained grants on official websites of implementing agencies providing grants (starting June 17).

4. Placing the list of organizations having participated and recognized as winners in competitions for provision of grants from the State Budget of RA on official websites of the implementing agencies providing grants (starting June 17).

Responsible institution: Ministry of Justice of the Republic of Armenia

Supporting institution(s): Staff of the Government of the Republic of Armenia, Ministry of Finance of the Republic of Armenia

Start date: September 2016 End date: June 2017

Context and Objectives

The processes for allocating grants from the state budget are regulated by several legal acts. The laws on annual budgets specify the lists of organizations receiving grants without competition, indicating organizations’ name, amount of grants, specific projects and the agency providing a grant. However, the procedures for selecting these organizations, as well as monitoring and reporting of implementation of state-funded projects are not defined. This gap has been discussed for several years in various reports, including the USAID CSO Sustainability Index^{[Note102: 2016 CSO Sustainability Index for Central and Eastern Europe and Eurasia, https://www.usaid.gov/sites/default/files/documents/1866/CSOSI_Report_7-28-17.pdf ]} which states that the process for selecting these CSOs is not transparent and the provision of grants is mostly done on a non-competitive basis at the discretion of state agencies. However, two governmental agencies—the President's Administration and the Ministry of Sport and Youth Affairs—organize grant competitions through intermediary organizations. The information on the outcomes of these competitions and/or the funded programs is usually posted on the websites of the intermediary organization, Armenian Youth Fund^{[Note103: Armenian Youth Fund website, http://www.heh.am ]}, in the case of the President’s grants, and on the special grant program platform http://www.cragrer.am in the case of the Ministry of Sport and Youth Affairs.^{[Note104: Ministry of Sport and Youth Affairs, Online Grant System, http://www.cragrer.am ]}

This commitment intends to increase transparency of grants funded from the state budget through publishing the list of organizations receiving grants from each state agency as well as project reports for such grants.

The commitment lists activities related to legal changes and actual publication of lists and reports of organizations receiving grants.

The intended results of the commitment are efficient management of budget funds, increased accountability and public confidence. However, the commitment covers only the information on grants received through competition, while the problem highlighted by the research and stakeholders is the lack of a competitive mechanism of grant distribution, as well as a lack of reporting on organizations and projects funded from the state budget.^{[Note105: Naira Arakelyan (Armavir Development Center NGO), Tamara Abrahamyan (Araza NGO), Marina Mkhitaryan (UNDP Kolba Lab), Varuzhan Hoktanyan (Transparency International Anti-Corruption Center), participants of focus groups in Yerevan and Gyumri]} The potential impact of this commitment would be negligible unless a competitive grant distribution mechanism is put in place for all agencies providing grants. The potential impact would be more significant if it covered not only grants but also funding from public resources, such as subsidies, donations, and procurement contracts. In this regard, the new Law on Public Organizations, adopted in December 2016, has provided more space for public accountability. According to the law, from 2018 public organizations must publish reports on any projects, funded from the state and/or community budget, including information on funding amounts, income sources and project results.^{[Note106: The Law on Public Organizations, 16.12.2016, Article 24, http://www.arlis.am/DocumentView.aspx?DocID=110802 ]}

Completion

There has been limited progress on the commitment implementation. The government (Cabinet) adopted decision No 579-N on 1 June 2017 'On making supplements to Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003.'^{[Note107: Government decision No 579-N'On making supplements to Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003', 01.06.2017, http://www.arlis.am/DocumentView.aspx?DocID=113823 ]} According to this decision, in a three-day period after signing a grant contract with an organization, the name, address, and project proposal of the funded organization is published on the official web page of the state body allocating the grant.

Prior to the adoption, the draft decision was circulated among all the ministries for discussion.^{[Note108: Suren Krmoyan, Mariam Galstyan (Ministry of Justice), interview by IRM researcher, 25 October 2017]} There was no electronic or in-person consultation with civil society representatives. The decision was adopted on 1 June 2017 and entered into force on 16 June 2017. As of 1 November, 2017, the IRM researcher could not find a list of organizations recognized as winners of state grant competitions on any ministry website. The Ministry of Sport and Youth Affairs website provides a link to http://www.cragrer.am established in 2010, where the results of grant competitions within the scope of State Youth Policy implementation are posted.^{[Note109: Ministry of Sport and Youth Affairs website, Grant Projects, http://www.msy.am/en/category/dramashnorhayin-tsragrer.html ]}

As a result of the government decree, some ministries, including the Ministry of Agriculture and the Ministry of Education and Science, started to post grant project reports on their websites. More details on the implementation of activities 3 and 4 of the commitment are covered in the next section on Early Results, as this information refers to actual changes in government practice. At the time of writing the report, the IRM researcher noted that in general, the grant project reports are not available on the websites of implementing agencies in proper quality and scope. Thus, it is concluded that activities 3 and 4 of the commitment have not been completed on time (June 2017 as per action plan).

Early Results (if any)

In November 2017, FOICA, a CSO working in the area of access to information, sent out inquiries to all the ministries requesting information on grant competition results and grant project reports in 2017. According to the responses, at the time of writing, most ministries did not hold grant competitions in 2017. The grants were distributed in accordance with the Law on Budget 2017, which specifies the list of grants provided without competitions.^{[Note110: The Law 'On State Budget 2017 of the Republic of Armenia' Annex 1, Table 16 'List of projects identified by the Law 'On State Budget 2017 of the Republic of Armenia' for which the relevant government agencies will provide allocations to economic entities in the form of grants, without competition', http://www.arlis.am/Annexes/4/PT92.1_2016page925-950.pdf]} There are also cases where grants or donations are provided by special governmental decrees.

As a result of the governmental decree stipulating publication of grant project reports, the Ministry of Agriculture created a page on grant projects on its website^{[Note111: Ministry of Agriculture website, Grant Projects, http://bit.ly/2AjTxtF ]}, after the mid-term reporting period. At the time of writing, this page presents contract documents and brief financial reports of one grant project, though grants were allocated to 10 organizations in 2017. Several reports are provided on the website of the Ministry of Education and Science, posted in July and October 2017,^{[Note112: Ministry of Education and Science website, Narrative reports on activities conducted by organizations in the third quarter of 2017 within the framework of grant projects by MES Staff General Education Department, http://edu.am/index.php/am/documents/view/1835 ]} including narrative project reports or notification letters provided by 20 organizations, though grants were provided to 38 organizations in 2017.^{[Note113: Give Me Info, Queries, Ministry of Education and Science, http://www.givemeinfo.am/hy/case/2297/ ]} This information can be useful for reviewing the results of the projects funded from the state budget. However, as the scope of implementation is limited, the impact of this commitment on the practical level is yet to be seen.

Next Steps

In order for the commitment to be completed, all ministries need to start posting information on all the grants provided to various organizations on their websites. It is recommended that all agencies adopt the same standards on the titles and content of grant report documents.

To ensure transparency of state funding allocation, further steps are needed. The next OGP action plan can include a commitment with measures for ensuring transparency and accountability of funding from the state budget. These can be:

· Reform the grant allocation process to ensure competitive and transparent mechanisms for providing grants.

· The state agencies allocating budget funding to organizations need to provide a rationale for donating grants or outsourcing services to other organizations and identify major budget lines and eligible costs allowed by the grants to justify public spending.

· Extend the scope of publication of information on state-funded projects, ensuring that not only the lists and reports of grant projects, but also the list of organizations receiving subsidies, donations, assistance and other types of funding from the state budget, as well as the relevant narrative reports are publicly available.

2. Transparency of state grants

Commitment Text:

Title: Accountability of grants from the government: Ensuring transparency and accountability of allocation of grants from the State Budget of the Republic of Armenia

Posting on the official website of the respective government agency the list of organizations having participated and recognized as winners in the competition for obtaining grants from the State Budget, as well as the reports on projects implemented under the grants. Main objective is to raise the level of effectiveness of using grants allocated from the State Budget of the Republic of Armenia, enhance access to information on procedures for allocating grants and on projects implemented under the grants, the goal of a grant, accountability and transparency of the field.

The activities under this commitment are as follows:

1.Drafting amendments and supplements to legal acts defining the procedures for provision of grants and discussion thereon with interested representatives of civil society (Sep-Dec 16).

2.Coordination of legal acts with interested agencies and adoption thereof (Jan-May 17).

3.Posting reports of organization having obtained grants on official websites of implementing agencies providing grants (starting June 17).

4.Placing the list of organizations having participated and recognized as winners in competitions for provision of grants from the State Budget of RA on official websites of the implementing agencies providing grants (starting June 17).

Responsible institution: Ministry of Justice of the Republic of Armenia

Supporting institutions: Staff of the Government of the Republic of Armenia, Ministry of Finance of the Republic of Armenia

Start date: September 2016 End date: June 2017

Commitment Aim

This commitment intended to increase transparency of grants funded from the state budget by publishing the list of organizations receiving grants from each state agency and project reports for the allocated grants. The intended results of the commitment are efficient management of budget funds, increased accountability, and public confidence.

Status

Midterm: Limited

This commitment saw limited progress during the first year of the action plan. On 1 June 2017, the government adopted Decision No 579-N amending the Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003, specifying the procedures of providing grants and subsidies to legal entities. The amendments stipulate that state agencies that fund grants must publish to their website (within three days after signing a grant contract with an organization) the name, address, and project proposal of the funded organization. [Note9: Government decision No 579-N 'On making supplements to Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003”, 01.06.2017, http://www.arlis.am/DocumentView.aspx?DocID=113823 ] According to the procedures of providing grants and subsidies to legal entities, adopted in 2003, the organization that receives the grant must provide a report on the grant project’s implementation within the timeline set by the contract. The amendment adopted in 2017 also stipulated that the state agency must publish these reports to the website within three days after their acceptance. [Note10: Government decision No 579-N 'On making supplements to Decision of the Government of the Republic of Armenia No 1937-N of 24 December 2003”, 01.06.2017, http://www.arlis.am/DocumentView.aspx?DocID=113823 ] There was no electronic or in-person consultation with civil society on this Decision.

At the time of writing the midterm report, the IRM researcher could not find a list of grant-recipient organizations on any ministry website. It should be noted that the commitment covers only the list of grants received through competition, while most of state grants are provided in a non-competitive manner based on the Law on Budget and other legal acts or special governmental decrees. For more information, see the Armenia IRM Progress Report 2016–2017. [Note11: IRM Armenia Progress Report 2016-2018 (Year 1), 02 Accountability for Grants of the Government, https://www.opengovpartnership.org/commitment/02-accountability-grants-o...

End of term: Limited

In the second year of the action plan implementation, many of the ministries providing grants have posted grant project reports on their websites. In particular, grant project reports are available on the websites of the Ministry of Culture, [Note12: RA Ministry of Culture, Grant Projects, http://mincult.am/grants-program.html ] the Ministry of Agriculture, [Note13: RA Ministry of Agriculture, Grants, http://minagro.am/դրամաշնորհներ ] the Ministry of Education and Science, [Note14: RA Ministry of Education and Science, Narrative reports on activities in 2017 by the organizations in the framework of grant contracts with RA MES http://edu.am/index.php/am/documents/index/161 ] and the Ministry of Sport and Youth Affairs. [Note15: RA Ministry of Sport and Youth Affairs, Report/Statistics, http://www.minsportyouth.am/category/hashvetvoutyounner.html ] The reports have different formats and content, varying from a scanned one-page documents with a single table including information on total project budget to a comprehensive narrative covering project goals, activities, and outcomes. In addition, the Ministry of Health publishes compiled information in table format on the grants it funds throughout the year, including the title and address of recipient organizations, budget line, contract terms and amount, evaluation criteria, and reporting terms. [Note16: RA Ministry of Health, Grants and Subsidies, http://www.moh.am/#1/990 ] However, there are no project reports published by this Ministry.

According to the Annex to the Law on Budget 2017, [Note17: The Law “On State Budget 2017 of the Republic of Armenia” Annex 1, Table 16 “List of projects identified by the Law “On State Budget 2017 of the Republic of Armenia” for which the relevant government agencies will provide allocations to economic entities in the form of grants, without competition”, http://www.arlis.am/Annexes/4/PT92.1_2016page925-950.pdf] specifying the list of grants to be provided without competition, there are other state agencies that should have funded grants in 2017, such as the Staff of the Government, the Ministry of Diaspora, the Ministry of Economic Development and Investments, the Ministry of Labor and Social Affairs, the Ministry of Nature Protection, as well as other ministries and state committees. Overall, 21 agencies are indicated in the list of grants provided without competition. However, apart from the above-mentioned five ministries, the IRM researcher could not find grant project lists or reports on the websites from these agencies.

Did It Open Government?

Access to Information: Marginal

As stated in the action plan, this commitment aimed to improve the effectiveness of grants allocated from the budget, as well as to enhance access to information on the procedures for allocating grants and on the projects implemented under the grants. [Note18: OGP Third National Action Plan of the Republic of Armenia (2016-2018), http://ogp.am/u_files/file/3AP_ENG.docx] The implementation of the commitment, however, covers only part of the problems highlighted in the field, such as providing information on the projects implemented under the grants, while the procedures for grant distribution and effectiveness of the grant allocations remain unaddressed. Moreover, the scope of the provided grants project reports is limited, and the format and quality of the available reports needs improvement. Based on the findings related to the status of the commitment’s implementation and the outlining problem related to the lack of transparency in public funding, this commitment demonstrates marginal progress in disclosing government-funded grant information.

Carried Forward?

At the time of writing this report (September 2018), Armenia has not finalized its fourth action plan. During consultations for the fourth action plan, CSOs have suggested a commitment related to transparency of grant distribution be included in the next action plan. The IRM researcher recommends focusing on the following directions of activities in the framework of the current commitment:

·Ensure publication of grant project reports by all governmental agencies;

·Adopt unified standards on the titles and content of grant report documents;

·Reform the grant allocation process to ensure competitive and transparent mechanisms for providing grants, including providing a rationale for donating grants or outsourcing services to other organizations;

·Extend the scope of publication of information on state-funded projects, ensuring that not only the lists and reports of grant projects, but also the list of organizations receiving subsidies, donations, assistance, and other types of funding from the state budget, as well as the relevant narrative reports are publicly available.

For Commitment detail, see Armenia End-Term Report 2016-2018.