By Atom MarkarianThe Armenian government approved on Thursday several legislative initiatives aimed at improving Armenia’s much-criticized business environment, in the hope of securing another $20 million loan from the World Bank early next year.
The budgetary loan is the first tranche of the bank’s new “structural adjustment credit” (SAC-5) which was originally due to be released this year. But its disbursement was delayed over the slow pace of structural reforms in Armenia.
Prime Minister Andranik Markarian’s cabinet now hopes that a new Armenian law on business insurance as well as major amendments to several other laws regulating economic activity will lead the bank to unblock the funds. That would allow the government to clear a large part of its expenditure arrears dating back to 2001 and 2000.
“The government has fulfilled its assumed obligations,” said Tigran Khachatrian, the deputy finance minister. “It remains to be seen whether the World Bank procedures are speedy enough to lead to the disbursement of the first [SAC] tranche early next year.”
Officials also said that the World Bank board in Washington, which was due to discuss the issue on Thursday, will dispatch a fact-finding mission to Yerevan later this month. Its conclusion will be crucial for the fate of the SAC-5 installment.
The government has already succeeded in having its leading Western creditor unblock another $20,000 million loan, which was conditional on a successful privatization in the Armenian energy sector. The loan is expected to be transferred to the Armenian state treasury by the end of this month. The World Bank agreed to make it available after Yerevan addressed its concerns regarding the new owner of the Armenian power distribution network.
The offshore-registered firm, Midland Resources Holding, has pledged to hire an experienced operator to run the loss-making network.