By Emil Danielyan
The European Bank for Reconstruction and Development (EBRD) reaffirmed on Tuesday its increased interest in the Armenian economy which is materializing into more investments in the mostly medium-sized local banks and manufacturing firms.
The London-based lending institution promoting economic reform across the former Communist bloc upgraded its presence in Armenia by appointing its first-ever resident representative in Yerevan. The official, Michael Weinstein, declared that “Armenia is now much more important to the EBRD than ever before.”
“I will do my best to keep the momentum going and hopefully increase it,” Weinstein said at his first news conference in the new capacity. “We will focus on working with local banks as well as dealing more and more directly with a wide range of industries.”
According to Michael Davey, head of the EBRD department dealing with the three South Caucasus states as well as Belarus and Moldova, the bank invested 8 million euros ($10.4 million) in Armenia last year and expects to nearly double the figure this year. The investments have taken the form of loans or equity purchases.
The EBRD’s intention to step up its involvement in Armenia was first announced by its president, Jean Lemierre, during a visit to Yerevan last May. He said at the time that a large part of the money will be channeled into Armenian banks that will in turn lend it to private firms that will submit investment projects worth between $500,00 and $2 million.
The EBRD was set up by leading Western donor states in 1992 to foster the transition of former Communist countries to the free market. Its investments in Armenia have since totaled about $115 million.
The EBRD’s biggest project in Armenia to date was a 46 million-euro loan disbursed in 1993 for the construction of the new Fifth Unit of the Hrazdan thermal power plant, the largest in the country. The sum proved insufficient due to poor government planning and, according to some media allegations, corruption.
Another major EBRD loan worth 17 million euros was used for the construction in the late 1990s of a big cargo terminal at Yerevan’s Zvartnots international airport. With the terminal now used far below its operational capacity, this project too failed to live up to expectations. These fiascos seem to be a key reason why the EBRD now prefers to deal mostly with the Armenian private sector and focus on smaller-scale investments.
“Our focus is on the private sector,” Davey confirmed.
(Photolur photo: Davey, left, and Weinstein speaking at the news conference.)