Key Accomplishment of 17 years of USG Assistance - Page 5

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Tax/Fiscal Reform (1998-2009)

During the past ten years (1998 – 2008) USAID had three activities to address tax and fiscal issues. The first activity from 1998-2001 focused on computerization of the tax system. As a result, all of the State Tax Service offices now had computers and electronic data collection records, an important step forward from the manual systems which had previously been used. The second activity, 2001- 2004, continued to assist STS in training, study tours, compensation changes, taxpayer information, and information technology upgrades. As a result, the GOAM achieved strides in developing a functioning tax system on the ruins of a centrally planned economy, in which taxes did not exist in a market sense. For instance, some existing tax collections forms developed in the Soviet period still called taxes “contribution to the budget.” Thus, while the tax system was established, tax officials still were doing to do their jobs. There was still a long way to go to instill into citizens the tax paying discipline for the public good, and having a professional public service corps at the STS. The main success related to Tax achieved of the two earlier projects was to reduce staffing (20% reduction), computerize the STS offices and improve taxpayer information among other accomplishments. The Tax Service was also introduced to many new concepts for modernizing the tax system, though most were only partially adopted. The main successes of the Tax Improvement Project was an increase in the Tax/GDP ratio (the prime contract goal), an improvement in understanding of management of how to better manage the tax service, and to secure STS agreement to organizational restructuring along more modern lines.

SME/Industry Development (1997-2009)

Support to micro, small and medium enterprises has been a focus of USAID/Armenia's programs. Over 7,700 micro-entrepreneurs have received USAID-funded loans totaling nearly $7.6 million dollars. Over 500 small- and medium- enterprises (SMEs) received another $3.1 million in loans. USAID’s Medium Enterprise Development Initiative increased access to finance by introducing purchase order financing with injected at least $5.8 million in short-term working capital; contributed to a 52% increase small businesses registration and the creation of 23,000 jobs outside Yerevan, in 2005; and achieved small business sales and investment growth of $750,000, which translated into employment growth of 25 % in client businesses and represented a $7.50 return on USAID’s investment for every $1 spent. With its Agriculture SME project overall 141 firms have received direct assistance; the average jobs created, per enterprise, was about 48 and five companies have increased sales by more than $1 million per year, eleven by more than $500,000 and 23 by more than $100,000.

Under the current Competitive Armenian Private Sector (CAPS)project, USAID provided assistance to 34 private companies in IT, tourism, and pharmaceuticals sectors to improve management, marketing and governance practices; 14 companies invested in improved technologies; strengthened capacity of sector associations and business service providers; USAID has spurred considerable growth in Information Technology and Tourism through increasing companies’ skills to conduct business, helping industry associations and assisting academia and training institutions to prepare qualified workforce. In 2008, USAID assistance contributed to the creation of 2,697 new jobs as well as a 26% increase in sales in the tourism sector and 15% in Information Technologies (IT) sector. To ensure the availability of quality workforce for the dynamic IT sector, USAID worked closely with industry on workforce development and improvement of management and business practices. Activities aimed at curricula reform for academic and vocational courses, increased capacity for companies’ human resources management, wider use of modern business skills, and improved job placement services.