WB SUPPORTS OPERATIONS TO MITIGATE THE IMPACTS OF THE GLOBAL ECONOMIC CRISIS ON ARMENIA
Shakeh Avoyan

"Radiolur"
25.02.2009 15:20

The World Bank approved a package of four operations, for a total
amount of US$85 million, to help Armenia mitigate the impacts of
the global economic crisis, Head of the World Bank Yerevan Office
Aristmene Varoudakis told reporters today.

Three of the operations — the Lifeline Roads Improvement Project
(US$25 million), the Additional Financing for the Social Investment
Fund (US$8 million), and the Additional Financing for the Rural
Enterprise and Small Scale Commercial Agriculture Development Project
(US$2 million) — were processed under the International Development
Association (IDA) financial crisis response Fast Track Facility, which
will help Armenia mitigate the impacts of global economic crisis on
the country’s economy and the well-being of its population.

The fourth operation – Access to Finance for Small and Medium
Enterprises Project (US$50 million) – is provided through the
International Bank for Reconstruction and Development (IBRD) to support
local businesses in the current environment, and is the first IBRD
loan to Armenia.

The Bank’s ability to provide this support in a timely manner has been
made possible by Armenia’s strong foundation of implementation capacity
and policy reform momentum, and by the flexibility provided through
the IDA Fast Track=2 0Facility and Armenia’s eligibility for IBRD
financing. These operations build upon previous work in these sectors
by the World Bank and other donors, through both lending operations
and technical assistance. In many instances, these operations build
upon existing implementation and institutional arrangements that have
good performance records.

"These projects will support urgent local works that can be implemented
largely over this year, to provide immediate employment opportunities,"
said Asad Alam, Regional Director for the World Bank’s South Caucasus
Country Department. "They will also help strengthen infrastructure
connectivity particularly in rural areas, meet business needs, and
upgrade social infrastructure that will foster medium-term growth
and improvement in living standards."

The Lifeline Roads Improvement Project will support rehabilitation
of approximately 100 km of rural roads, connecting local communities
with main roads and generating about 200,000 job-days of employment
for Armenia works.

The Social Investment Fund financing will support small-scale
investments in 55 of the poorest communities of Armenia, through
basic small-scale social and economic infrastructure rehabilitation,
and will generate short-term employment of up to 86,000 job-days. The
Rural Enterprise and Small Scale Commercial Agriculture Development
financing will complete 35 community-focused economic development
projects and extend additional support to five20to seven new
communities. The three Fast Track credits are provided on IDA terms,
with a maturity of 20 years, including a grace period of 10 years.

The Access to Finance for Small and Medium Enterprises operation
is the first IBRD loan to Armenia, and will provide financing to
domestic banks for on-lending to the small and medium enterprise
sector, thereby supporting investment and employment generation and
improving the resiliency of Armenia’s private and financial sectors in
the face of the global economic crisis. The credit line will support
SME development through a difficult period, when these businesses are
facing increasing challenges in raising finance through the banking
system or via remittances. Under the loan, the Central Bank of Armenia
(CBA) will enter into subsidiary loan agreements with eligible banks
for on-lending funds to enterprises at market rates. The initial
ceiling on individual sub-loans is set at US$150,000. The IBRD loan
is provided with a maturity of 26.5 years, including a 5-year grace
period.

Since Armenia joined the World Bank in 1992, commitments to Armenia
have totaled approximately US$ 1,162 million. There are currently
16 projects under implementation with an undisbursed amount of about
$94 million.