OREANDA-NEWS. November 29, 2007. The World Bank on November 27 approved a US$18.5 million Fourth Poverty Reduction Support Credit (PRSC) for Armenia, the Bank's press service announced. The project will support the implementation of the government’s Poverty Reduction Strategy Program (PRSP) by helping to sustain economic growth, providing resources for the budget, bolstering the fight against illegal logging and facilitating priority reforms of the government. This fourth installment will bring total budget support from the Bank to over $85 million since 2004.

The Bank helps the Armenian Government to reduce costs in telecommunications and aviation by fighting monopolies, in order to benefit exporters and businesses generally and to spur job creation.  Some of the funding will be used to build systems that will enable the public to access full information on companies and their owners – a vital first step for companies to become more transparent and attract more foreign and domestic capital for investment and job creation.

A key objective of the program is to ensure that customs and tax administrations are reformed in order to reduce corruption, thereby improving the prospects for investment.  The credit is also supporting adequate monitoring and combating of illegal logging in order to ensure that Armenia’s forests are protected. The conservation of Armenia’s forests will help the poor as they will benefit from more investment opportunities in rural and mountainous areas.

"Looking at the entire four-year program, we are confident the Government has used these funds wisely," said Saumya Mitra, head of the World Bank’s economic team.  "If you look at the deep-seated reforms that have taken place external observers can see where these funds have been spent. They are visible in new education and health policies -- rationalizing schools and using money saved to repair schools and raise teacher salaries and training standards and modernizing hospitals and focusing on primary health care. The country now benefits from better quality and reliability in electricity and public utility services, cheaper phone calls and more competition in the mobile market, and higher spending on pensions and poverty benefits.  These were all high priority actions for the Government over the past three years and the Bank’s technical advice and financing have helped the country to achieve results."

But Armenia can not be complacent – the country still has considerable work to do if it is to continue to be competitive. By eradicating monopolies in the distribution of commodities and in production and by raising standards in customs and tax administrations, it can continue to improve the business environment.  These steps are necessary if the excellent economic performance of the recent past – very high economic growth and a sharp fall in poverty – is to be repeated.

The credit is provided on concessional terms, with a maturity of 20 years, and a grace period of 10 years.

Since joining the World Bank in 1992, Armenia has benefited from US$1.1 billion in loans for 49 projects.