A lending arm of the OPEC group of oil-exporting nations provided Armenia on Thursday with a $25 million loan that will be used for upgrading water and irrigation networks in the country’s impoverished rural regions.
Finance Minister Gagik Khachatrian signed a corresponding agreement with Suleiman Jasir Al-Herbish, director-general of the OPEC Fund for International Development (OFID), at the OFID’s headquarters in Vienna.
According to the Armenian Foreign Ministry, the money will be channeled into rural areas across Armenia suffering from high poverty rates. “The lending program is aimed at increasing the productivity of owners of small land holdings and fostering poverty reduction,” the ministry said in a statement.
Announcing the agreement on Twitter, the OFID said the loan will benefit 80,000 people.
The Armenian government secured a $40 million from the Moscow-based Eurasian Fund for Stabilization and Development (EFSD) for similar purposes in July. The low-interest credit repayable in 20 years is supposed to be spent on refurbishing canals and modernizing equipment supporting them.
Armenia’s Soviet-built irrigation networks have already absorbed considerable capital investments in the last several years. That includes a $177 million reconstruction of 6 major canals, 17 water pumping stations and the water drainage system of the southern Ararat and Armavir provinces, which was financed by a U.S. government agency, the Millennium Challenge Corporation. The project was completed in 2011.
Later in 2011, the World Bank disbursed an $18 million loan for further irrigation upgrades in the country, which were due to benefit about 90,000 farmers.
A lack of irrigation water has been one of the main problems hampering the development of the Armenian agricultural sector.