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


EBRD forecast for Armenia’s Real GDP Growth in 2022 8.0%

EBRD forecast for Armenia's Real GDP Growth in 2023 4.0%

The solid post Covid-19 recovery seen in 2021 has accelerated further during 2022, with economic growth reaching 13.1 per cent in the period January-July 2022. Negative spillovers from the country’s high exposure, through trade, remittances, and foreign direct investment, to the sanctions-hit Russian economy were outweighed by the arrival of many people and businesses from Russia who found a temporary refuge in 24 Armenia and boosted demand for services. The net inflow of money transfers increased by 113 per cent year-on-year in the January to July 2022 period due to a more than three-fold increase of transfers from Russia. These inflows helped to finance the widening trade deficit, as import growth of 50.1 per cent year-on-year exceeded strong export growth of 43.9 per cent during this period. Foreign reserves have increased by almost 20 per cent since the beginning of the year and the exchange rate appreciated by 18 per cent. Initially, inflation slightly accelerated under pressure of the new wave of rising energy and food prices, but later moderated to 9.1 per cent year-on-year in August 2022. The Central Bank of Armenia reacted by increasing the refinancing rate several times during 2022, the latest to 11 per cent in August. Uncertainty remains high, however, robust growth of 8.0 per cent is forecast for 2022, with a significant drop to 4.0 per cent likely in 2023. Current growth is driven by temporary factors that could be easily reversed, and the ongoing isolation of the Russian economy from Western markets could have long-term negative consequences for the Armenian economy.

Armenia in the EBRD’s 2022-23 Transition Report

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