Armenia amends loan agreement with FDA to receive funds as early as  2025

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.