Measuring fiscal structural reform intensity: The case of Armenia

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Type of the article: Research Article

Abstract
Fiscal structural reforms play a decisive role in strengthening macroeconomic stability, enhancing public sector efficiency, and improving institutional resilience in transition economies. Armenia represents a particularly relevant case, where successive reform waves have been closely linked to external adjustment programs and domestic political cycles. The purpose of this study is to measure the intensity of fiscal reforms in Armenia and to evaluate their dynamics over the period 1995–2024. For this purpose, a Fiscal Structural Reform Index (FSRI) is constructed, integrating revenue, expenditure, and institutional reforms based on IMF MONA benchmark data. Reforms are coded by significance (0.25 = minor, 0.50 = medium, 1.00 = major), adjusted for persistence through a geometric decay factor (0.8), and aggregated using Principal Component Analysis (PCA). The first principal component explains 71.2% of the total variance, ensuring the robustness of the composite index. The results indicate that reform intensity in Armenia exhibits a cyclical pattern, peaking during IMF-supported programs in 1999–2001, 2009–2011, and 2016–2018, and moderating during periods of political transition. Institutional reforms display the highest persistence, accounting for the largest share of the index, while revenue and expenditure reforms are more episodic. The analysis demonstrates that both external conditionality and internal political shifts strongly influence reform momentum. The FSRI provides a replicable framework for tracking fiscal reform intensity, supporting policy design, and strengthening structural diagnostics in transition and developing economies.

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    • Figure 1. Scree plot of principal components derived from fiscal reform subcomponents
    • Figure 2. Trends in fiscal structural reform subcomponents (1995–2024)
    • Figure 3. Annual contribution of reform components to FSRI, 1995–2024
    • Figure 4. Heatmap of fiscal reform intensity by type (1995–2024)
    • Table 1. Classification of fiscal structural reform components
    • Table 2. Principal components analysis result (PCA)
    • Table 3. Key variables and calculated dataset for the Fiscal Structural Reform Index (FSRI)
    • Conceptualization
      Tatul M. Mkrtchyan, Narine Petrosyan
    • Project administration
      Tatul M. Mkrtchyan, Narine Petrosyan
    • Resources
      Tatul M. Mkrtchyan, Narine Petrosyan
    • Supervision
      Tatul M. Mkrtchyan, Narine Petrosyan
    • Validation
      Tatul M. Mkrtchyan, Narine Petrosyan
    • Writing – review & editing
      Tatul M. Mkrtchyan
    • Data curation
      Narine Petrosyan
    • Formal Analysis
      Narine Petrosyan
    • Funding acquisition
      Narine Petrosyan
    • Investigation
      Narine Petrosyan
    • Methodology
      Narine Petrosyan
    • Software
      Narine Petrosyan
    • Visualization
      Narine Petrosyan
    • Writing – original draft
      Narine Petrosyan