ArmInfo. The Cabinet of Ministers of Armenia is amending the EUR 150 million loan agreement between the Republic of Armenia and the French Development Agency (FDA), signed on September 26, 2025, aimed at improving the efficiency and sustainability of public service delivery in Armenia, as well as developing the financial sector, as part of the budget support program.
As stated in the explanatory note to the document, this budget support, which amounts to EUR 150 million in loan funds, is the third phase of a multi-year program (2019-2025) and has two main objectives: - strengthening economic and financial management, in particular by improving the efficiency of public finance management; - improving the planning and financing of the transition to a low-carbon and sustainable economy.
The program is being implemented jointly with the Asian Development Bank (ADB), and therefore, the implementation of the reforms outlined in the policy table, jointly with ADB, is a prerequisite for the disbursement of loan funds to the FDA. In this context, it is noted that the policy framework, while quite extensive and complex to implement, was brought to its logical conclusion.
"However, given that the allocation of FDA funds under the Agreement is conditional on the ADB Board of Directors' approval of the loan to Armenia, and the ADB Board of Directors can no longer be convened in a certain year, it became necessary to initiate an amendment to the Agreement to remove this precondition and allow the FDA loan funds to be released in a certain year," the document states.
The Program includes three main thematic components:
- Improving the public financial management system for the efficient and sustainable delivery of public services and infrastructure; - Strengthening the framework for issuing and managing government securities and the money market infrastructure; - Developing new instruments for financing entrepreneurship and ensuring more transparent governance.
These components include the corresponding objectives outlined in the public policy matrix, which are defined based on a programmatic approach consisting of three stages/subprograms. The first (Subprogram 1) and second (Subprogram 2) stages were implemented in September 2022 and September 2024, respectively. The third stage (Subprogram 3), financed by this budget support loan, is planned for implementation in 2025. For each objective of the public policy matrix, several public policy measures are defined, which are presented within the three subprograms in a logical sequence. As stated in the Cabinet decision of September 25, 2025, the Program is being implemented jointly with the Asian Development Bank, so the scope of reforms is also identical to the policy table of the loan agreement to be signed with the Asian Development Bank in the near future.
The loan terms offered under the agreement are as follows: loan amount - EUR 150 million, co-financing - EUR 150 million from the Asian Development Bank, the loan amount will be provided in one tranche, interest rate: for each tranche, the Borrower can choose a floating or fixed interest rate. The floating interest rate is equal to the 6-month EURIBOR rate (or, if unavailable, the corresponding reference interest rate) plus a margin of 1.2%, which is fixed in the Agreement (the previous agreement set a margin of 0.5%). Based on the 6-month EURIBOR interest rate of 2.108%, effective September 12, 2025, the floating interest rate on the loan will be 3.308%. The principal will be repaid in 38 equal semi-annual payments, beginning in 2026 and ending in 2045. The loan term is 20 years, with a one-year grace period.
