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A senior diplomat spoke of France’s “growing engagement” in Armenia on Wednesday as it allocated a 40 million-euro ($44 million) loan that will be used for financing the Armenian government’s budget deficit.

The French Development Agency (AFD) formalized the disbursement with an agreement which one of its senior officials, Jean-Claude Pires, and France’s ambassador to Armenia, Jean-Francois Charpentier, signed with Finance Minister Vartan Aramian in Yerevan.

A statement by the French Embassy said the funding will support the Armenian government’s efforts to reduce poverty, improve the domestic business environment, and implement other economic reforms.

“The agreement marks France’s growing engagement in favor of the country’s social and economic development,” it quoted Charpentier as saying. “This funding will help to boost economic growth and job creation.”

The disbursement raised to approximately $140 million the total amount of AFD funding provided to Armenia since 2013. The French government agency’s previous loan worth $82 million was made available in January. It is being used for refurbishing and expanding Armenian irrigation networks.

A separate statement by the Armenian Finance Ministry also said that the French loan, repayable in 20 years, will support the implementation of the recently reshuffled government’s “reform program.” It did not specify whether the loan will be channeled into the Armenian state budget for this or next year.

The government is expected to fail to meet its 2016 budgetary targets because of a shortfall in its anticipated tax revenue. Aramian warned recently that the budget deficit could reach almost 6 percent of Gross Domestic Product because of that.

Prime Minister Karen Karapetian’s cabinet plans to reduce the deficit next year through spending cuts and better tax collection which is envisaged by its draft 2017 budget. The Armenian parliament began debating the spending bill on November 17.

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