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Armenia overview

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 EBRD’s latest Armenia strategy was adopted on 27 November 2019


EBRD forecast for Armenia’s Real GDP Growth in 2023 6.5%

EBRD forecast for Armenia's Real GDP Growth in 2024 4.5%

The economy continued its exceptionally strong performance in 2023, but the first signs of a slowdown are already visible. GDP growth reached 10.4 per cent year on year in the period from 27 January to July 2023, driven by the strong performance of service industries in particular. Net inflows of money transfers, which have been driving demand for services, declined by 10 per cent year on year in the first half of 2023, but the growth rates of exports and imports of goods remained robust. The exchange rate and foreign reserves have been broadly stable since the beginning of 2023. At the same time, the inflation rate fell below zero in July 2023, contributing to the reversal of the real effective exchange rate appreciation seen in the past two and a half years. The Central Bank of Armenia has started a gradual reduction in the policy rate, with two 25- basis point cuts in June and August 2023, bringing the policy rate to 10.25 per cent. Growth is likely to moderate in the second half of the year, as the temporary factors that contributed to Armenia’s double-digit growth are dissipating. Therefore, GDP is expected to grow by 6.5 per cent in 2023 and 4.5 per cent in 2024. Geopolitical developments remain an important source of downside risks. The isolation of Russia, a major trading partner for Armenia, from western markets could have negative long-term consequences for the Armenian economy. Further escalation of the conflict with Azerbaijan is another major risk to economic prospects. On the upside, progress in re-opening the land border with Turkiye could yield economic benefits in the medium term.

Armenia in the EBRD’s 2022-23 Transition Report

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