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 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 2018 5.5%

EBRD forecast for Armenia's Real GDP Growth in 2019 5.0%

Armenia’s economy is growing rapidly. Following a near stagnation in 2016, real GDP growth accelerated from 7.5 per cent in 2017 to an estimated 8.3 per cent year-on-year in the first half of 2018. Household consumption, capital investment and exports all contributed strongly to economic growth. Capital investments increased by 7.7 per cent in 2017 after eight years of decline (with the exception of 2015) and picked up further to an estimated 14.7 per cent year-on-year growth in the first half of 2018. The growth of money transfers from abroad continued in the first eight months of 2018, although at a more moderate rate of 4.9 per cent year-on-year. Inflation has been gradually accelerating closer to the central bank’s inflation target, standing at 2.6 per cent in the first nine months of 2018. Meanwhile, the Central Bank of Armenia has been able to maintain the policy rate at the lowest level since the beginning of 2010. The loan portfolio of commercial banks expanded by 10.2 per cent in 2017 and by a further 11.3 per cent in January-September 2018. Thus far, the pace of growth has been largely unaffected by the political uncertainty, while governance reforms initiated after the “Velvet Revolution” are expected to provide a stimulus to the economy. We forecast Armenia’s real GDP to grow by 5.5 per cent in 2018 and by 5.0 per cent in 2019. At the same time, weak agricultural outturns might weigh down growth this year. The volume of agricultural output contracted by 4.8 per cent year-on-year in the first nine months of 2018. Conflict in the Nagorno-Karabakh region poses a risk to the growth outlook.

Armenia in the EBRD’s 2018-19 Transition Report