By Emil Danielyan
Germany will provide Armenia with 74 million euros ($117 million) in fresh low-interest loans designed to improve its energy and water infrastructure and financial services, it was announced on Friday.
An agreement to that effect was signed in Yerevan by Finance Minister Tigran Davtian and German Ambassador to Armenia Andrea Viktorin. It envisages that the loans, repayable in 40 years, will be disbursed by Germany’s government and state-owned bank KfW in the next two years.
The bulk of the sum, 64 million euros, will be spent on upgrading Armenia’s largest hydro-electric plant and building two high-voltage power transmission lines in the country’s northern regions.
One of them will run to the Georgian border and connect the power grids of the two neighboring states. The Armenian Finance Ministry said the 20.4 million-euro project will result in the creation of a “joint electricity transmission system of South Caucasus states” that could be extended to Russia and Iran in the future. It said the other transmission line worth 14.6 million euros will boost the reliability of electricity supplies to residents of the northwestern Shirak region as well as Georgia’s Armenian-populated Javakheti province.
Another 6 million euros is to be used for the development of Armenia’s expanding mortgage banking sector. The Germans have already provided a comparable sum for that purpose in recent years.
According to the Finance Ministry, the promised funds will raise to almost 340 million euros the total amount of direct German assistance and loans to Armenia disbursed since 1993. The previous loan package worth 57 million euros was approved by the German government in April 2005. Most of the money was supposed to be used for helping Armenia tap its substantial hydro-electric power resources.