Armenia to borrow over 92 million euros from IBRD to cover budget deficit

YEREVAN, June 21. /ARKA/. Armenian Deputy Finance Minister Eduard Hakobyan told a meeting of parliamentary committee on financial and budget issues that the government will spend the €92.3 million loan from the International Bank for Reconstruction and Development (IBRD) to finance the budget deficit.
According to him, the IBRD loan (around $100 million) is part of the government plan to raise $350 million 'to meet its financial needs.'
The agreement signed between Armenia and the International Bank for Reconstruction and Development (IBRD) was approved by the government in April. IBRD will provide €92.3 million loan for the Armenia Green, Resilient and Inclusive Development Policy Operation project.
The loan was approved earlier by the World Bank's Board on March 24. The operation supports the 2021- 26 Program of the Government of the Republic of Armenia and is aimed at promoting green, resilient, and inclusive development by: improving the regulatory framework for environmental management to help Armenia mitigate and adapt to the pressures of climate change.
It will also be used to enhancee equity and promoter human capital development; and support the anti-corruption framework and justice sector efficiency.
This EUR 92.3 million (US$100 million equivalent) loan is an IBRD flexible loan with variable spread, with a 5-year grace period and a total repayment term of 19 years. This is the first operation in a programmatic series and is supported by parallel financing of EUR 50 million ($53.7 million) provided by the OPEC Fund for International Development, a multilateral development finance institution headquartered in Vienna, Austria.
The interest rate on the loan will be 3.8% with a spread of 0.64%.
A lawmaker from the opposition Hayastan alliance Artur Khachatryan pointed out that this is a very expensive loan with a high spread, which creates double risks for Armenia.
He also said that the government itself admits that it cannot comply with the requirements to receive programmatic loans, and takes expensive loans to finance capital expenditures .
Pro-government MP Gevorg Papoyan responded by saying that the procedures for receiving programmatic loans are lengthy, and it's quicker to take untargeted funds and direct them to specific projects.