Armenia overview

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Urban scene in Armenia

In Armenia we focus on:

Developing the financial sector and improving access to finance. The EBRD will focus on providing its traditional SME and micro-finance lines targeting areas outside Yerevan, the capital, and facilitating access to credit for SMEs in the rural areas. In rural areas, we will launch agricultural credit lines in local currency and associated Technical Cooperation (TC), in particular as the sector becomes more commercialised. The EBRD, in cooperation with the IMF and World Bank, will engage in policy dialogue and provide TC to strengthen the Central Bank’s capacity to reduce inflation and dollarisation and develop local money and capital markets.

Improving municipal and urban transport infrastructure. The EBRD will support enhanced private sector participation in the water and waste water sectors to support the introduction of cost-reflective tariff structures, improve service availability and reduce losses. We will support through our investments urban and municipal transport reforms including the introduction of integrated transport management and ticketing systems, better parking management and regulation of feeder bus and minibus services. Intensive policy dialogue will be required to support reforms at the central and local levels.To address affordability and debt capacity constraints, a high level of grant co-financing will be required along with gradual tariff increases toward cost recovery.

Developing agribusiness and high value-added, export-oriented industrial companies. The EBRD will help to address challenges in the industrial sectors through support for improvements to the business environment, strengthening corporate governance and increasing access to finance for local micro, small and medium sized enterprises (MSMEs). We will identify investments in industries with export potential, including in areas highlighted by the authorities’ recent programme of export promotion. The EBRD will aim to support the agricultural sector by targeting investments along the whole value chain. Where possible, we will aim to utilise local currency financing. The EBRD will also enhance activities to support MSMEs in key sectors through provision of advisory services.

Improving the regulatory and institutional framework for sustainable energy and increasing value-added in the mining sector. The EBRD will support investments in financially viable renewable energy projects and, through partner banks, continue to finance energy efficiency credit lines for industrial and residential users. We will support power generation, particularly new entrants and non-state participants, and will consider participating in regional electricity infrastructure projects that strengthen competition in the regional electricity market. The EBRD will support bankable mining operations with reputable investors who demonstrate high standards of environmental and social protection.

As well as being a country where the EBRD works, Armenia is also an EBRD donor. In 2015 Armenia signed a €1 million contribution agreement to the Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund. The first EBRD project with co-financing with E5P for street lighting in Yerevan was signed in 2015.

The EBRD’s latest Armenia strategy was adopted on 25 November 2015

EBRD forecast for Armenia’s Real GDP Growth in 2015 2.3%

EBRD forecast for Armenia's Real GDP Growth in 2016 2.0%

Armenia posted an estimated 4 per cent growth in the first half of 2015 (after 3.5 per cent growth in 2014), driven inter alia by the agriculture, mining and hospitality sectors. Following significant depreciation pressure at the end of 2014, the exchange rate stabilised in 2015 amid tight monetary conditions, central bank interventions in the beginning of the year and adjustment of the current account. Gross international reserves were on a downward path for most of 2014 and in January -February 2015 before increasing to close to four months of imports by September 2015. Public finances remained generally sound amid limited fiscal space. The budget deficit is expected to widen to between 3 and 4 per cent of GDP in 2015 on account of higher capital expenditures and revenues shortfall. Public debt is estimated at around 45 per cent of GDP in the first half of 2015. The regional economic slowdown has resulted in lower remittances to Armenia, including from Russia, lower imports and negative credit growth in the first eight months of 2015. We upgrade our Armenia GDP growth forecast to 2.3 per cent in 2015 and 2 per cent in 2016.

Armenia in the EBRD’s 2015-16 Transition Report


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