French Development Agency to issue EUR 75mln loan to Armenia for budget support programme

ArmInfo. The French Development Agency will provide Armenia with a loan of 75 million euros to implement the country's state budget support program. The draft law "On ratification of the agreement between the RA Government and the AFD" was approved at the meeting of the RA Cabinet of Ministers on August 8.

According to the RA Minister of Finance Vahe Hovhannisyan, the agreement was signed on June 26, 2024.  The program consists of three main components: improving the public finance management system, issuing government securities and strengthening the financial services market, as well as developing new instruments for financing entrepreneurship and ensuring a higher level of transparency. Within the framework of these components, reforms are planned in such areas as increasing the efficiency of budget planning, managing public expenditure risks, implementing reforms in the public investment system, including the public-private partnership system. It is also envisaged to carry out measures to modernize the public procurement system, develop green economy policies, strengthen adaptation to climate change and expand the use of green financial instruments.

The Armenian side undertakes to carry out work to improve the public debt management system, develop financial and capital markets, and expand corporate transparency by revising the legislative framework related to accounting and financial regulation. The Minister also noted that the program is being implemented by the French Development Agency jointly with the Asian Development Bank, so the scale of reforms is identical to the plan of the loan agreement that will be signed with the Asian Development Bank in the near future. Budget support funds will be used to finance the state budget deficit. Credit resources are provided at a floating rate of six-month EULIBOR plus a margin of 0.5%, which as of July 27 is 4.178%.  The Armenian side can change the floating rate to a fixed rate at any time. The repayment period of the main loan is 20 years, 5 of which are preferential.