The World Bank Group has pledged to provide Armenia with around $500 million in fresh loans and other funding over the next five years in support of its new government’s reform agenda.
The group’s executive board approved the 2019-2023 Country Partnership Framework (CPF) for Armenia at a meeting held in Washington late on Thursday. In a statement, it said the CPF is “fully aligned” with the Armenian government’s five-year policy program adopted earlier this year.
“The proposed World Bank Group strategy will capitalize on the momentum and political will for deeper reforms and renewed commitment to good governance sparked by recent changes in Armenia to support a rebalancing of the economy toward a new growth model,” said Sylvie Bossoutrot, the head of the World Bank office in Yerevan.
The bank’s previous, four-year assistance strategy for Armenia was approved in 2013. It called for $873 million in total funding.
The latest CPF calls for more low-interest loans to Yerevan as well as investments by the World Bank’s private sector arm, the International Finance Corporation (IFC), and risk insurance division, the Multilateral Investment Guarantee Agency (MIGA).
The Armenian energy sector is understood to be a major beneficiary of the planned aid package. The bank said IFC, which specializes in equity purchases, will help to modernize the sector in order to reduce its reliance on imported fuel.
“IFC will also support the government’s efforts to increase competition and open the economy to foreign investment by providing direct financing to companies and supporting the development of export-oriented industries,” added its statement.
“IFC welcomes the opening of Armenia’s economy and the creation of new opportunities for investment,” said Jan van Bilsen, the IFC regional manager for the South Caucasus.
The World Bank has already been Armenia’s leading foreign creditor and donor, having provided it with over $2 billion in loans and grants since 1992.
The government program cited by the bank envisages that the Armenian economy will grow by at least 5 percent annually for the next five years. In its latest Global Economic Prospects report released in January, the World Bank forecast slightly lower growth rates for this year and 2020.
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