FDA to provide EUR 75mln under budget support program 

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 Government of  the Republic of Armenia and the French Development Agency" was  discussed at the plenary session of the National Assembly of the  Republic of Armenia on October 23.

According to RA Finance Minister Vahe Hovhannisyan, the agreement was  signed on June 26, 2024. The loan funds will be used to finance the  country's 2024 budget deficit, which is 482.9 billion drams. 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 with the ADB. 

AFD 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.