Thursday, April 29 2021 13:04
Naira Badalian

Armenia is going to prolong the loan with ADB and significantly  increases the financial burden of the state treasury

Armenia is going to prolong the loan with ADB and significantly  increases the financial burden of the state treasury

ArmInfo. Armenia is extending the terms of the loan agreement with the Asian Development Bank, as it does not keep pace with the terms of its implementation and increases the financial burden of the state treasury.

On April 29, the RA  government approved the draft law "On ratification of the loan  agreement between the Republic of Armenia and the Asian Development  Bank" On the program to improve the Armenia-Georgia border regional  road (M6 Vanadzor-Bagratashen).

As stated in the explanatory notes to the document, the RA and ADB  signed a loan agreement on November 9, 2016, for an amount equivalent  to $ 50 million - 44,037,000 euros, for a period of 22 years with a  15-year grace period. The document entered into force on April 24,  2017. The main goal of the program is to restore and modernize a  section of a two-lane highway in northern Armenia - from Vanadzor  through Alaverdi to the border with Georgia - Bagratashen with a  length of almost 51.7 km, as well as to prevent deterioration of the  quality of the road network, and to ensure safe, fast and easy  movement. It is planned that following the results of the  implementation of the program on the Vanadzor-Bagratashen road  section with a total length of 51.5 kilometers, the pavement will be  repaired, the route will be equipped with protection means and  adaptation capabilities to climate change. The project completion  date is November 30, 2020, the loan repayment is May 31, 2021.

Meanwhile, the Ministry of Territorial Administration and  Infrastructures believes that the agreement should be prolonged due  to the fact that the construction contracts were signed on November  30, 2017, in fact, construction work began 13 months later - on May  29, 2018. The expected completion timeline for construction work  includes the contractor's liability period for omissions identified  after completion of the work (365 days per contract). "According to  the concluded construction contract, 900 days are allotted for the  completion of construction - from the date of the start of work, that  is, on November 14, 2020," the document says. Thus, the deadlines  stipulated in the agreement - November 30, 2020, are disrupted.

According to the document, taking into account the fact that August  31, 2021 is considered a more realistic date for the completion of  construction work, the parties agreed to prolong the loan agreement  until December 31, 2022 (completion of construction - August 31,  2021, completion of the liability period for omissions - August 31,  2022 and 4 months are allotted for the financial audit.

As a result, according to the conclusion of the Armenian Ministry of  Finance, the budget allocations for 2021 planned under the agreement  - 2,870,727.8 thousand drams, will be exceeded, since according to  the calculations of the Ministry of Territorial Administration and  Infrastructures, the required amount will increase to 7,726,300.0  thousand drams. Consequently, in 2021, the state budget expenditures  on loan servicing will significantly increase, the RA Ministry of  Finance noted. 

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