The Asian Development Bank (ADB) has approved a $100 million policy-based loan under a new program that will help strengthen fiscal management and improve financial markets in Armenia.
The Fiscal Sustainability and Financial Markets Development Program will help the government strengthen its fiscal management policies and practices, improve the infrastructure of money markets and the government securities market, and promote capital markets.
“Recent economic shocks such as the COVID-19 pandemic interrupted Armenia’s growth momentum, but the country has demonstrated a remarkable commitment to reforms that has allowed it to keep sustainable debt levels and macroeconomic management credibility,” said ADB Director General for Central and West Asia Yevgeniy Zhukov. “ADB is happy to support the Government of Armenia in its efforts to further enhance fiscal management and enhance financial markets to achieve sustainable economic growth.”
The program supports reforms that will upgrade fiscal planning, management, and transparency, and raise the economic and social impact of public expenditure. It aims to promote liquid money markets and sustain a public debt securities issuance program that is conducive to market development. It also supports actions that will broaden the base of financial instruments and investors, including the possible development of green finance instruments.
“The reform actions that Armenia has been undertaking over the past few years, which includes integrating climate change mitigation and adaptation into strategic planning, are crucial to improve public sector efficiency and reduce the risk of fiscal instability,” said ADB Principal Financial Sector Economist João Pedro Farinha-Fernandes.
“ADB is coordinating closely with development partners to ensure the supported measures adequately and sustainably address gaps and challenges,” said ADB Senior Economics Officer Grigor Gyurjyan.
The Agence Française de Développement helped develop the program and will cofinance it with a €100 million policy-based loan.
ADB is one of Armenia’s largest multilateral development partners. Since 2005, the bank has provided financial assistance worth more than $1.6 billion, supporting government priorities including in transport, energy, water, and urban infrastructure. In the private sector, ADB finances utilities and infrastructure, financial institutions, and agribusiness.