By Atom Markarian
The World Bank will release next month the second instalment of a vital $50 million loan to Armenia which was delayed over the government’s worsened collection of taxes, bank officials said on Friday.
The disbursement of the tranche worth approximately $15 million was originally expected in early September. A World Bank spokesman, Vigen Sarkisian, said the authorities have since taken necessary steps to reverse the fall in budget revenues. “Conditions [attached to the loan] have been met and we think that the second tranche will be made available in November,” he told RFE/RL.
Armenia’s tax and customs authorities collected 38 billion ($69 million) drams in total revenues in the third quarter of this year, 17 percent less than was projected by the government. Minister for State Revenues Yervand Zakharian, the country’s chief tax official, pledged to eliminate the shortfall before the end of the year.
The World Bank funds are part of its fourth Structural Adjustment Credit (SAC-4) which is supposed to cover nearly half of Armenia’s budget deficit this year. The loan is linked to continued tight fiscal and monetary policies and further structural reforms.
Its third $20 million tranche is conditional on a “transparent and open” privatization of Armenia’s power utilities. Analysts cast doubt on the commercial success of the undertaking after the government decided last week to allow Russia’s RAO United Energy Systems to take part in the bidding. The decision of the US utility AES to drop out of the international tender, which was revealed by Energy Minister Karen Galustian earlier this week, dealt a final blow to the government’s stated efforts to privatize its electricity distribution firms on a competitive basis. The move left only bidder, RAO UES, in the race.
The World Bank has previously opposed the Russian company’s possible ownership of Armenian power grids, saying that it has neither resources nor expertise to turn them into successful businesses. Spokesman Sarkisian said the bank will not disburse the final SAC-4 tranche unless the tender is handled properly. But he would not comment on consequences of a possible RAO UES win.
Western donors fear that the Russians will get hold of the Armenian utilities by simply writing off part of Armenia’s $90 million state debt to Moscow. The two governments are currently negotiating on the list of Armenian companies that will fall under Russian control under the impending assets-for-debts agreement.