World Bank Assesses Cooperation With Armenia

YEREVAN (Noyan Tapan)–Despite the statement by Armenia’s Minister of Finance Vardan Khachatrian who challenged the advisability of further cooperation with the largest foreign donors of the country – the International Monetary Fund and the World Bank – the WB positively assesses cooperation with the Government of Armenia–according to the WB Resident Representative in Armenia Owaise Saadat–who held a press conference in Yerevan on Tuesday.

"The minister was in a difficult situation–and I understand the implication of the statement," said Saadat. "However the empirical facts–testify to the following: in 2001–14 WB projects promoting Armenia’s development worth a total of $295 million were implemented in Armenia. Thus–due to WB credits–schools–outpatient clinics–roads–water pipelines–energy facilities–and many other industries are being reconstructed," said Saadat. The results of nearly the entire package of programs–according to him–were highly evaluated by the WB. Since 2002–the WB allocated close to $80 million for new programs; for example the SAC-4–irrigation program–and the Information Technologies Incubator. Negotiations with Armenia’s government about new programs–such as SAC-5–Natural Resources Management–Struggle Against Poverty–as well as Education System Reform Program are continuing.

However–according to Saadat–there are problems that need to be solved. Ten percent of the finances for the programs must come from the government of Armenia–however–the government has not been able to allocate the funds thus far. The government’s inability to fulfill its financial obligations may endanger all the programs. Saadat cited the following example: if the government does not allocate funds for the transportation of textbooks published with funds from the WB credit–the main goal of the education program – to supply schoolchildren with textbooks – will not be achieved.

Another program is tax arrears–as a result of which the second tranche of the WB SAC-4 credit was delayed. According to Saadat–the low level of tax revenues is one of the reasons that the economic growth in Armenia will not increase the welfare of the country’s people.

Saadat also pointed out that the WB would continue its work over the final variant of the country’s poverty reduction strategy.

The deadlines for the second tranche of the SAC-4 credit worth $15 million has not been decided yet. The WB continues to study how far the macroeconomic indexes of Armenia correspond to deman’s presented in the IMF’s letter. According to Saadat–the allocation of the tranche is not connected with the privatization of the power grids–on which the WB had insisted earlier–but fell through. Saadat also mentioned that negotiations on the issue of trust management of the power grid and the allocation of the last "floating" tranche of SAC-4 worth $20 million are being held with the Armenian government.

Saadat also mentioned the World Bank’s willingness to help the Armenian government combat domestic corruption. "Corruption is not an ideological expression but an economic fact," said Saadat–who later added that it is difficult to speak about the size of the shadow economy since it requires special research.

In other World Bank news–an Armenian project on cooperation submitted by local public organizations working in the sphere of information technologies won the WB tender on market development. The project–which was recognized as one of the best among the projects presented by the countries of Eastern Europe and Central Asia–received a grant worth $100,000.

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