Armenia amends financial agreement with AFD

ArmInfo.  Armenia is amending the Financing Agreement for the "Armenia - Development of Irrigated Agriculture in the Ararat and Armavir Regions" project. The proposal to sign Addendum No. 3 to Financing Agreement No. CAM 1002 06 D dated April 23, 2020, between the Republic of Armenia and the French Development Agency was approved by the Cabinet of Ministers on February 12.

As stated in the explanatory note to the document, a number of  objective factors were identified during the Project implementation  that significantly impacted the schedule for the implementation of  planned activities. Practical implementation of the Project actually  began later than planned, which reduced the period available for  effective implementation. The processes of selecting, concluding  contracts, and mobilizing international short-term experts by the  Project Operator required more time than originally planned, delaying  the completion of a number of key analytical and methodological work.  Furthermore, objective problems were also identified in the water  sector: the process of concluding contracts with the second operator  took longer than expected, and limited access to irrigation water in  the target areas hampered fieldwork.

The above-mentioned factors directly impacted the main components of  the Project, including the formation and development of farmers'  cooperatives, support for cooperatives and farmers' groups, and the  implementation of the Project's financial instruments (co-financing  grants, collateral fund, cooperative development fund, land  consolidation fund).

Of particular importance among the key prerequisites for the  successful implementation of the Project is the construction of the  Vedi Reservoir, which will provide water supply to farmer irrigation  networks in the target areas of the Ararat region of the Republic of  Armenia. Delays in the construction of the Vedi Reservoir and the  incomplete operation of the associated infrastructure have become a  significant obstacle to the introduction of modern irrigation  systems, the creation of demonstration sites, and the stimulation of  farmer investment activity. In the above circumstances, the proposed  measures under Amendment No. 3 to the Financing Agreement, which  provide for an extension of the Project implementation period until  December 19, 2027 and the deadline for the use of funds until March  31, 2028, are aimed at ensuring the full implementation of the  Project, taking into account the existing objective constraints and  new realities that have arisen during its implementation," the draft  decision states.

ArmInfo previously reported that the French Development Agency (AFD),  in partnership with the EU, will provide Armenia with a ?10 million  grant under the "Development of Irrigated Agriculture in the Ararat  and Armavir Regions" program. The program is designed for three years  (2018-2020). The funding will be used to implement drip irrigation  systems, establish intensive orchards, process fruit crops, lay  secondary irrigation canals, and consolidate land. The goal of the  "Development of Irrigated Agriculture in the Ararat and Armavir  Regions" project is to support the development of modern irrigation  through technical assistance and investment: removing barriers  related to access to reservoirs, developing irrigation  infrastructure, land consolidation, advisory services, and loans. The  project consists of a technical assistance component (?4.4 million)  and an investment grant component (?5.6 million). The program will be  implemented by the RA Ministry of Economy (agricultural sector - ?8.5  million) and the Armenian Territorial Development Fund of the RA  Ministry of Territorial Administration and Infrastructure (irrigation  sector - ?1.5 million). It consists of three main components, each  with its own subcomponents:  institutional support for national and  local beneficiaries engaged in irrigated agriculture; improvement of  irrigated agricultural production; and communications and project  management costs.

The program is expected to modernize irrigation infrastructure over  an area of 2,000 hectares and establish at least 20 production  cooperatives and farmer groups. Ten land consolidation activities  will also be implemented.

This program is interconnected with another project also funded by  the AFD - the Vedi Reservoir Construction Program. The program aims  to consolidate several communities in the Ararat region adjacent to  the Vedi Reservoir, which is currently under construction and where a  drip irrigation system is planned.  The reservoir's construction  should ensure reliable irrigation of 7,500 hectares of land in the  Ararat Plain. It is expected that the implementation of both programs  will resolve the issue of irrigation for agricultural land in the  region.

French Development Agency (ADF) was founded in 1998 and operates the  bilateral development financial mechanism of the French Republic.  Under the jurisdiction of the French Ministries of Foreign Affairs,  Economy and Finance, Overseas Territories, and the Interior, the AFD  is a government-run trade and industry agency that combats poverty  and promotes economic growth in both developed countries and the  French Overseas Territories. On December 18, 2025, the French  Development Agency (AFD) opened its new office at the Yerevan Plaza  Hotel. The AFD Group, present in Armenia since 2013, finances  projects that contribute to the fight against climate change and work  towards a just and inclusive transition. The agency supports the  sustainable management and conservation of natural resources, the  energy transition, public financial management, and urban services.  Since 2013, AFD has allocated ?555 million in loans and approximately  ?30 million in assistance to Armenia, of which ?23.5 million was  provided by the European Union.