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New Armenia strategy puts EBRD focus on private sector
With a per-capita income of $789, Armenia is one of the poorest of the EBRD’s countries of operations, hampered by limited employment opportunities and isolation due to the unresolved dispute over Nagorno Karabakh.
Nevertheless, average growth rates have exceeded 11 per cent the last two years and progress has been achieved on liberalisation and selected structural reforms. The fiscal deficit has been trimmed, the external debt burden eased, and the spring 2003 elections, despite serious irregularities, have created a political framework for market-oriented reform.
In its new strategy for Armenia, now available on www.ebrd.com, the EBRD identifies accelerating structural reforms, improving the business climate, enforcing the rule of law, strengthening the financial sector, and finalising the privatisation process as the country’s major transition challenges. Accordingly, the Bank will focus primarily on the development of the private sector, including efforts to improve the business environment.
The main operational objectives for the EBRD are:
• Enterprise sector: The Bank will focus on further expanding SME and micro-enterprise financing. Funding will mainly be provided through credit lines to local partner banks and direct equity investments. The Bank is ready to provide legal transition assistance.
• Financial sector: The EBRD will aim to extend further support to existing and additional banks and to expand its Trade Facilitation Programme to further strengthen financial intermediation. The Bank will seek suitable equity investment opportunities in local banks.
• Portfolio monitoring and implementation support: Particular emphasis will be given to continued proactive project monitoring.
• Infrastructure and state-owned public utilities: Operations involving suitable state- or municipal-owned utilities and infrastructure companies would be considered mainly on a basis that does not require sovereign guarantees, if accompanied by appropriate regulatory and institutional reform.
The EBRD has a portfolio of €51.4 million in Armenia, covering eight projects in the power, transport, general industry and financial sectors. Of these, six are in the private sector, representing 44 per cent of the total portfolio.
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