ArmInfo.Armenia will attract 75 million euros from the French Development Agency (Agence Francaise de Developpement -AFD) to finance the state budget deficit. At a meeting on June 20, the RA government decided to sign a corresponding agreement with the AFD, the signing ceremony of which is scheduled for June 26.
The Government argues, the credit resources will be directed to increasing the efficiency of budget planning, ensuring transparency in the implementation of budget programs, risk management and public expenditure. It is also planned to use part of the funds to reform the public investment system based on public-private partnership. The public procurement system will be modernized, the green economy policy will be expanded, and adaptation to climate change will be strengthened using green financial instruments.
The AFD loan also provides for work to improve the public debt management system and develop financial and capital markets.
Notably, the program will be implemented by the French Development Agency jointly with the Asian Development Bank, so the scale of reforms will be identical to the political plan of the loan agreement to be signed with the ADB in the near future.
According to the 2024 state budget of Armenia, the state treasury deficit this year will amount to 341.1 billion drams (about $880 million, the estimated exchange rate of the US dollar is 385.9 drams per $1) or 3.2% of GDP. As a result, the government debt/GDP ratio at the end of the current year will amount to 48.4%. Maintaining the debt at this level will help maintain the positive trends in the RA government rating, create an additional "stability reserve" to counter possible future risks, and have a manageable level of interest payments on the debt.
