WORLD BANK APPROVES NEW ASSISTANCE PROGRAMME WITH ARMENIA
Venla Sipila
World Markets Research Centre
Global Insight
June 17, 2009
The Board of the World Bank has approved a new co-operation programme
for Armenia. According to ARKA News, the international lender will
extend $670US-700 million for the country during 2009-2012. The new
loans will be supplied under a new Country Partnership Strategy,
formulated to fit Armenia’s Sustainable Development Programme (SDP)
with the World Bank. The SDP aims at addressing vulnerability in the
short term, while also seeking to strengthen competitiveness in the
long term. In particular, the new programme will see $150US million
extended in the form of International Development Agency (IDA) credit
with especially soft lending terms, while $395US million will come
in the form of International Bank of Reconstruction and Development
(IBRD) lending, and some $120US-160 million will be lent via the
private sector through the International Finance Corporation (IFC).
Significance:With foreign investment and remittances now in short
supply due to the global downturn, Armenian external borrowing needs
have increased. Effects from the global crisis have lifted Armenian
financial risks, given its wide external financing needs. In addition
to loans from the World Bank, Armenia has secured emergency funding
from the International Monetary Fund (IMF; seeArmenia: 9 March 2009:
).The now approved new World Bank credits further highlight the
notion that, while Armenian risks and challenges remain considerable,
its recent reform efforts have been convincing enough to secure
it strong help from international financial institutions. However,
the currently pressingly high financing needs have also necessitated
further borrowing. Notably, Russia agreed to a $500US-million loan,
which according to ARKA News was withdrawn to Armenian accounts last
week (seeArmenia: 21 May 2009:).