By Atom MarkarianCiting a continuing “strong macroeconomic performance,” the World Bank announced on Friday the release of a fresh $20 million loan to Armenia that will be used for financing its government’s budget deficit.
An agreement on the disbursement of the “poverty reduction support credit” (PRSC) was signed by Finance Minister Vartan Khachatrian and the head of the World Bank’s Yerevan office, Roger Robinson. It followed a meeting of the bank’s governing board in Washington late on Wednesday.
The board’s decision also paved the way for the release of a $5 million budgetary grant to Armenian from the government of Holland.
“This money is in direct support to our budget [for this year] and will be used for various expenditures,” Khachatrian said.
“The project will assist the government to implement the ambitious Poverty Reduction Strategy over the coming years,” Saumya Mitra, a senior World Bank official, said in a separate statement. “It will also support the government’s drive to improve the quality in the delivery of essential public services.”
The PRSC is aimed, among other things, at “sharpening competition and entrenching property rights” in Armenia, the statement said. The credit is part of the World Bank’s new “country assistance strategy” approved last summer. Yerevan is expected to get up to $220 million in loans under the four-year program. It has already borrowed more than $800 million from the bank since independence.
World Bank loans and donor grants have been the main source of deficit-funding for the Armenian government and the next year will be no exception. The government’s 2005 budget deficit is projected at 47 billion drams ($94 million).
Robinson endorsed the main parameters of the draft budget, singling out a planned major increase in government expenditures on education, health care and social services. The government wants to spend more on education than defense.
“In the modern history of Armenia this is the first time that has happened since 1990,” Robinson told reporters. “I think this is very symbolic.”
(RFE/RL archive: Roger Robinson.)