2.2 Reforms in the Social Sphere

During transition, the social sphere (i.e. social security, education and science, health care, culture and sports) is one of the least "reformed" in the economy. The amount of state expenditures directed towards social needs in 1998 was 14,916 drams or around 30 USD per capita. This comprises 31.6% of (the overall expenditures set in) the 1998 state budget. Budget expenditures on health care in 1998 are estimated at 3,610 drams or about 7 USD per capita. These make 1.4% of GDP (3.2% in the world on average).

In accordance with the Government's decree of April 1999, a state-guaranteed free health care system is carried out under nine targeted state projects financed from the state budget.

The currently operative "Health Financing and Primary Health Care Development" project financially supported by the World Bank (WB) is designed to ensure adequate quality and accessibility of medical services. The World Health Organization (WHO) provided assistance to Armenia in developing a long-term health care program with the following objectives:

1. providing equal medical services,

2. improving the population's health,

3. introducing a multi-segment strategy to ensure health care promotion,

4. launching an efficient system of medical aid,

5. overseeing and managing reforms in the health care sector.

Health care development programs attach special importance to the protection of maternal and child health. Apparently, this is an area where certain improvement is observed. Recent years have recorded a fall in maternal and infant mortality rates. Maternal mortality rate per 100,000 live births was 20.8 in 1996, 38.7 in 1997, and about 30 in 1998. To compare, the same indicator equals about 136 in Turkey, and 8 in Europe.

Among the problems that have emerged in the health care infrastructure within the past decade is a medical system developed mostly according to market-regulated mechanisms, which has resulted in a drastic reduction of the state's regulatory role, unacceptably low access to medical aid, and a continual deterioration of the population's health on the whole. The elaboration of an obligatory state medical insurance policy aimed at improving the sector is currently underway. In the mean time, volunteer private insurance has been successfully introduced.

State budget expenditures allocated to education and science in 1998 constituted 2.1% of the GDP, of which only 0.3% was for science. The 1998 budget expenses in these spheres made 4.981 drams or 9 USD per capita, whereas, the average world expenses for the same purpose were as high as 5.2% of GDP, and 5.5% - for developed countries in 1995, according to World Development Report (WDR) 1998.

The "Education Financing and Management Reforms" project, carried out on the basis of a WB loan, is designed to enhance the efficiency of the school self-management system, to provide greater financial independence to schools, and to assist them in the supply of textbooks and other training materials. The Armenian Government passed a decree endorsing a pilot program of reforms in the public education system whereby financial aid, based on the number of students (per capita) will be provided to 10% of state-owned educational institutions (secondary schools) in the 1999/2000 academic year. It is also expected to carry out decentralization of management and administration through school councils in the marz- and community-run institutions, as well as a rationalization of the existing network.