ArmInfo. The World Bank will provide Armenia with a loan of 92.3 million euros and a grant of 16 million euros to finance the budget deficit. The resolution was approved at a government meeting on March 28.
As stated in the explanation to the document, between the Republic of Armenia and the International Bank for Reconstruction and Development (IBRD is the main lending institution of the World Bank, provides financing to the governments of middle-income countries and creditworthy low-income countries) it is planned to sign an agreement on financing budget support for the "Second Operation of the Policy." green, sustainable and inclusive development>, according to which it is planned to provide Armenia with a loan in the amount of 92,300,000 euros and a grant in the amount of $16 million from the Global Concessional Finance Facility.
Implementation of measures and reforms in a number of areas identified by a bilaterally agreed table of policy actions is a prerequisite for receiving budget support funds. The program, in particular, covers: promoting climate change mitigation and adaptation, as well as improving the regulatory framework for environmental management; strengthening equality and promoting human capital development; increasing the effectiveness of the anti-corruption system and the justice sector.
In March 2023, ArmInfo reported that the World Bank Board approved a new loan of 92.3 million euros ($100 million) for Armenia's Green, Sustainable and Inclusive Development Policy Operation (GRD). The major reforms supported by this Operation are consistent with the World Bank Armenia Partnership Framework 2019-2023. It was noted that the loan of 92.3 million euros (equivalent to $100 million) is a flexible IBRD loan with a variable spread, a grace period of the first five years and a total repayment period of 19 years.
At the same time, since 2017, the financial authorities of Armenia have declared their readiness, starting in 2019, and then starting in 2021, to abandon external financial assistance in the form of budget loans and move to targeted lending to strengthen the foundations of the economy. As the then Minister of Finance Atom Dzhandzhugazyan assured during discussions of the draft state budget of the Republic of Armenia for 2020, the stage of financing the budget deficit from external resources in our country can be considered completed. As the chief financier of Armenia explained, today many consider this instrument quite attractive, since a budget support loan differs from other types of borrowing in that it does not have a program for specific targeted spending and is provided on preferential terms. However, these types of preferential loans are dangerous because the country may become completely dependent on external borrowings, the minister noted.
