The executive boards of the International Monetary Fund and the World Bank have finally approved nearly $140 million in new loans to Armenia, meant to bolster the authorities' mid-term economic strategy with an emphasis on poverty reduction, it was announced on Wednesday. The government in Yerevan welcomed the move, saying it reflects the lending institutions' continuing support for its economic policy.
The IMF's three-year Poverty Reduction and Growth Facility (PRGF) worth about $87 million aims to sustain macroeconomic stability in Armenia. The low-interest credit will go to shore up hard currency reserves of the Armenian Central Bank. Its first $13 million tranche will be made available this week, according to Finance and Economy Minister Vartan Khachatrian.
"Armenia's comprehensive and ambitious macroeconomic and structural reform program in the 2001-03 period is a continuation of efforts to ensure sustained and rapid economic growth as the cornerstone of efforts to reduce poverty," the IMF's deputy managing director, Eduardo Aninat, said in a statement on Tuesday. He said the success of the government program depends on "consolidating and sustaining macroeconomic stability, and proceeding decisively with the next stage of structural, legal, and institutional reforms."
The World Bank's $50 million Structural Adjustment Credit (SAC) will cover approximately half of the government's budget deficit for this year. The credit will be disbursed in three installments, with the first $15 million tranche due to reach the state treasury in the coming days. The last $20 million payment is pegged to the privatization of state-run power utilities. The cabinet has pledged to carry out the sell-off before the end of this year.
Both loans stress the need for the improvement of the business climate in Armenia, currently riddled with corruption and bureaucratic red tape. Speaking at a news conference, Khachatrian reaffirmed the government's pledge to ensure the rule of law and clamp down on corruption.