Armenia to take out EUR 92.3mln from WB to cover budget deficit  

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.