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World Bank Approves New Budgetary Loan To Armenia

By Emil Danielyan

The World Bank has disbursed a new $20 million loan to Armenia, citing the country’s “exemplary macroeconomic performance” and its government’s efforts to reduce widespread poverty.

The money, which will be channeled into the Armenian state budget, is the second installment of a three-year lending program that was launched by the World Bank in November 2004. In a statement circulated by its Yerevan office on Friday, the bank said that by financing part of the 2006 budget deficit it will assist in the implementation of the Armenian government’s poverty reduction drive.

“[The $60 million program] will also support the government’s drive to advance quality in the delivery of essential public services and improvement of the business climate,” Saumya Mitra, a senior World Bank official, was quoted as saying.

Both the bank and the International Monetary Fund endorsed the government’s Poverty Reduction Strategy when it was unveiled in 2003. It set an ambitious goal of reducing the proportion of Armenians living in poverty to 19 percent by 2015. The government claims to be successfully implementing the plan. Official statistics show the national poverty rate declining from 50 to 33 percent between 1999 and 2004.

However, government critics consider the data misleading, saying that the official poverty line is set too low and does not take account of the increased cost of life in Armenia.

The World Bank statement said continued robust economic growth is essential for raising living standards in the country. It said that requires further reforms that will ensure better governance, improve the business climate and public services and “entrench property rights.”

The World Bank is Armenia’s number one lender, having allocated a total of $916 million in low-interest loans since 1992. More than a third of that have been direct budgetary loans. They financed as much as half of Armenian budget deficits during the late 1990s.

The latest credit will cover only 13 percent of the $155 million budget deficit projected for this year, highlighting Armenia’s decreased dependence on external borrowing.

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