Underscoring its status as Armenia’s leading European donor, Germany has announced its intention to provide up to 100 million euros ($137 million) in fresh loans aimed at fostering the country’s economic development.
The German ambassador in Yerevan, Hans-Jochen Schmidt signed a relevant agreement with Finance Minister Tigran Davtian on Tuesday.
Armenian Finance Ministry said the four loans as well as some 5.5 million euros in separate German grants to Yerevan will be disbursed “in the coming years.” The Armenian and German governments will negotiate separate and more detailed agreements on each item of the funding package, it said.
According to a ministry statement, the largest of the promised loans, worth 40 million euros, will finance rural infrastructure projects in the northern Shirak and Lori regions. The German government will lend another 40 million euros for the reconstruction of Armenia’s largest hydro-electric station, located in the southeastern Syunik region, and renewable energy projects.
Another loan, worth up to 20 million euros, will be channeled into the development of the Armenian mortgage market. The German state-run bank KfW has already provided comparable sums to local commercial banks in an effort to make mortgage loans more accessible and affordable for Armenians.
The Armenian government and Central Bank set up a state-owned mortgage fund for the same purpose last year. Its authorized capital stood at 17 billion drams ($44 million) as of last December.
“The continuing efforts by the Federal Republic of Germany are aimed at improving the living conditions of people in Armenia as well fostering Armenia’s economic development and helping it overcome transitional difficulties,” the German Embassy in Yerevan said in a statement. It said the Armenian government will receive 12 million euros in additional aid for the implementation of unspecified “regional projects.”
According to the Finance Ministry, Germany has provided Armenia with 118 million euros in loans and 42.3 million euros worth of grants to date within the framework of “financial-technical cooperation” between the two countries. The Armenian energy sector and small and medium-sized enterprises have been among the main beneficiaries of that funding.
The embassy statement put the total amount of German loans and aid to Armenia allocated since 1995 at 220 million euros. Germany has also been the single largest contributor to the European Union’s separate multimillion-dollar assistance to Yerevan.
In addition, Germany has been one of Armenia’s leading trading partners and its number one export market in the EU. Armenian government data show that the total volume of German-Armenian trade stood at $292 million in 2009, accounting for 7.3 percent of the South Caucasus state’s external commerce.