250 ENTITIES BECOME BENEFICIARIES OF IFAD AND WORLD BANK FINANCED CREDIT PROGRAMS ON DEVELOPMENT OF ARMENIAN AGRICULTURE

Noyan Tapan
Nov 6, 2007

YEREVAN, NOVEMBER 6, NOYAN TAPAN. About 250 processing enterprises
and farms have become beneficiaries of the International Fund for
Agricultural Development (IFAD) and the World Bank (WB) financed
credit programs on development of the Armenian agriculture. Processing
enterprises make up 70% of the total number of the beneficiaries. Some
enterprises engaged in cattle breeding and planting of new gardens
have also received credits. Under these programs, vineyards of
about 1,000 ha, including vineyards of 500 ha in Vayots Dzor marz,
have been planted in Armenia. NT correspondent was informed about
it by Ara Muradian, the director of the "Rural Financing Facility"
programs implementation office – state institution of the RA ministry
of finance and economy.

According to him, the IFAD- and the WB-financed programs encourage
the introduction of new technologies because it is necessary to use
equipment, production processes and expert potential in line with
European standards in order to enter European markets.

The Rural Financing Facility was established in 2005 under the
cooperation agreement signed between the Armenian government and
the IFAD. The total cost of the agreement is 28 million dollars,
9.4 million dollars of which is envisaged for credit provision with
the aim of economic development of rural areas.

A. Muradian said that credits of nearly 6 million dollars were
provided through 8 Armenian banks under the credit component of the
IFAD’s program in the period of February 2006 to October 2007. The
program included all Armenian marzes, except for Yerevan and the
adjacent marzes of Ararat, Armavir and Kotayk, which are considered
as relatively prosperous by the Poverty Reduction Strategy Paper. The
amount of distributed resources exceeded by 2 million dollars the
index envisaged by the plan-budget, which is explained by the previous
absence of credit programs on the regions included in the program
and by great demand for financial resources.

A credit component of 5 million dollars is envisaged by the
agreement signed between the Armenian government and the World
Bank’s International Development Agency (IDA) in 2006. In the words of
A. Muradian, from the end of 2006 to late October 2007, about 2 million
dollars of WB credit resources was distributed through 5 banks. This
program includes the whole country, including Yerevan. A. Muradian
explained that the fact that the WB program’s financial resources are a
bit more expensive than those of the IFAD program is conditioned by the
inclusion of Yerevan and the adjacent marzes in the WB program: taking
into account the "extra" interest rates of banks, the beneficiaries
receive credits of the IFAD program at an annual interest of 10-12%,
while credits of the WB program have an interest rate of 12-14%.

A. Muradian said that the use of the mechanisms worked out by the Rural
Financing Facility allows to reduce the loss of credit resources to
zero. In his opinion, the highest appreciation of their work is that
their office will coordinate the work under the credit component of
the Millennium Challenge Armenia program. The office will provide
this program’s credits of 8.5 million dollars by using the mechanisms
formed during the IFAD’s and the WB’s programs.