ADB to provide $90.5 million loan to help improve infrastructure operations, sustainability in Armenia

The Asian Development Bank (ADB) has approved $90.5 million in a loan and a technical assistance grant to improve infrastructure operation and sustainability in Armenia through reforms in the road, water, and power sectors.

“Aging public infrastructure, limited fiscal resources and the lack of adequate prioritization and management of scarce public resources, limit opportunities for inclusive growth in Armenia,” said Matthew Hodge, economist with ADB’s Central West Asia Regional Department. “Providing adequate infrastructure services is critical to supporting economic activity and income generation, especially outside of the capital city.”

Armenia faces economic challenges and a tight fiscal situation due to reduced remittance inflows from the Russian Federation and lowering export demand from its main trading partners. The government’s fiscal consolidation limits budget allocations for infrastructure investment, operation, and maintenance in the foreseeable future, emphasizing the need for improved cost recovery, generation of alternative revenues, and better management of fiscal resources.

The program will focus on improvements in infrastructure operations and sustainability through enhanced public financial management practices and utility regulation, increased maintenance expenditures, and improved contracting and maintenance practices in the road and water sectors. In addition, the program will also introduce competition in the power market which opens the opportunities for greater revenue generation especially from exporting surplus electricity.

This is the second phase of the Infrastructure Sustainability Support Program supported by ADB. The first phase of the program, approved in 2012 and already completed, focused on policy reforms in the water and road sectors and laid the platform for deeper engagement and expansion of the program in the second phase.

The program is in line with Armenia’s Development Strategy 2014–2025, which recognizes the need to improve the country’s management of public infrastructure to improve connectivity and utility services.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

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