EU PLEDGES ECONOMIC ASSISTANCE TO ARMENIA AND GEORGIA
Lilit Gevorgyan

World Markets Research Centre
Global Insight
Oct 19 2009

Last week the European Union (EU) announced economic assistance
packages for Armenia and Georgia totalling 146 million euro ($217US
million). Armenia will receive a loan of 65 million euro and a grant
of 35 million euro, with the aid intended to alleviate the country’s
worst economic crisis since the early 1990s. Armenia has qualified
for the EU assistance due to its membership of the bloc’s Eastern
Partnership Programme (EEP). As an EEP member country Armenia, along
with five other former Soviet republics, is offered closer ties with
the EU in return for pursuing political and economic reforms. Georgia
will receive 46 million euro as part of the 500-million euro joint
EU-International Monetary Fund (IMF) package to help the country
restore its economy following the August 2008 war with Russia. The
Georgian aid package will come in two tranches; the first being
delivered by the end of this year and the second by the end of
July 2010.

Significance:The EU’s economic assistance comes at a critical time
for both Armenia and Georgia. The two small Caucasian states have been
badly hit by the economic crisis as well as ongoing ethnic conflicts
and political instability. Armenia’s economy is in worse shape than
Georgia’s. Georgia has seen a 4% contraction of its economy in 2009
while Armenia’s economic output has fallen by a staggering 18.4%. The
EU aid will be one of the major sources for the Armenian government
to cover its budget deficit in 2010. The EU assistance comes with
mandatory fiscal and regulatory reforms, including streamlining of
anti-monopoly laws. By providing the economic assistance the EU is
extending a helping hand but as the same time it has made clear to
the Armenian government that in the long run the only remedy for
the country’s economy will be fighting corruption and prudent fiscal
policies.

From: Emil Lazarian | Ararat NewsPress