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 2019 4.5%

EBRD forecast for Armenia's Real GDP Growth in 2020 4.5%

Armenia’s real GDP expanded by an estimated 8.5 per cent in the first half of 2018 before slowing down to an estimated 3.0 per cent in the second half of the year, giving an overall growth rate for the year of 5.2 per cent. A contraction in production in the agriculture and mining and quarrying sectors weighed on the growth of exports and economic output in the second half of the year. At 28.5 per cent, capital investments were the largest contributor to growth. However, this impressive growth is largely explained by one-off methodological changes; the increase in gross fixed capital formation was 5 per cent. Household consumption and exports both grew, albeit at lower rates than a year earlier. A strong expansion in consumer loans and a steady inflow of money transfers from abroad supported private consumption growth. The current account deficit widened significantly from 2.4 per cent of GDP in 2017 to 9.1 per cent in 2018, in part financed by foreign investments and increased bank deposits in foreign currency. The dram remained relatively stable against the US dollar. According to preliminary estimates, economic output grew by 6.5 per cent year-on-year in the first two months of 2019. We expect this positive growth trend to continue with real GDP growth of 4.5 per cent in both 2019 and 2020. In February 2019, the authorities reached a staff-level agreement with the IMF on a three-year Precautionary Stand-By Arrangement (SBA). Subject to approval by the IMF Executive Board, the SBA aims to support the new government programme, which is focused on achieving stronger and more inclusive growth, while at the same time preserving macroeconomic and financial stability.

Armenia in the EBRD’s 2018-19 Transition Report