By Atom Markarian
The World Bank formalized on Thursday release of a $1.3 million loan designed to bolster an Armenian government agency that is tasked with facilitating foreign investment and exports.
Officials said the low-interest loan, repayable in 40 years, will help the Armenian Development Agency expand its activities both inside and outside the country.
“The World Bank is helping ADA to become a world class agency for investment promotion,” the bank’s resident representative to Yerevan, Owaise Saadat, said after signing an agreement with Industry Minister Karen Chshmaritian.
According to Chshmaritian, ADA will be given a major role in the implementation of the Armenian government’s 15-year economic program which is currently in the works.
The agency was set up in 1998 with the aim of promoting foreign investment and helping domestic manufacturers find export markets. Saadat said the World Bank is encouraged by the fact that ADA has stepped up its activities since a major international conference on investment opportunities in Armenia held in New York last May.
The conference was organized and sponsored by the World Bank. Its president, James Wolfensohn, urged Western companies to invest more heavily in the Armenian economy, saying that the country’s leadership is committed to the free market.
However, the high-level forum has not yet resulted in any multimillion-dollar deals with foreign investors. Furthermore, the total amount of foreign direct investments (FDI) slumped to just under $100 million last year, down from the $190 million level registered in 2000. Government officials have played down the drop, saying that two foreign companies, the Hellenic Telecommunications Organization (OTE) and Russia’s Gazprom gas monopoly, accounted for a large share of the 2000 figure.
Visiting the ADA office in Yerevan last month, Kocharian said this year will see a sizable increase in FDI. But he gave no estimates for 2002, saying only that his government is keen to fight corruption and improve the regulatory framework for businesses.
The Economist Intelligence Unit, a respected London think tank, forecast last week that Armenia will attract $130 million a year in foreign investments until 2005. The EIU said in a report that the modest figure "reflects political risk and also an unattractive business climate."