World Bank Set to Release Some Delayed Loans

YEREVAN (RFE/RL)–The World Bank indicated on Tuesday that it will likely unblock some of its frozen loans to Armenia–saying that the Armenian government has addressed its misgivings about the recent controversial privatization of national power grids.

Its resident representative in Yerevan–Rodger Robinson–said a World Bank mission that held talks with Armenian officials last week will ask the bank’s board of directors to disburse a $20 million Structural Adjustment Credit (SAC-4) next month.

The bank and other Western donors had criticized the government’s decision last August to sell a commanding 80.1 percent share in the Armenian Electricity Network (AEN) to a British offshore-registered company for $37 million. They argued that Midland Resources Holding lacks the expertise to end the network’s huge losses.

But Robinson said the World Bank is now more positive about the deal–jointly working with the government to help Midland Resources find a "reputable and experienced operator" for AEN. "We are reasonably confident that this privatization has a chance for success in improving the electricity distribution system in Armenia," he said.

RFE/RL reported last week that Midland Resources may soon sign a management contract with the German engineering group Siemens.

The delayed SAC-4 tranche would cover more than a quarter of the Armenian government’s 2002 budget. The government also hoped to secure the first $20 million installment of another World Bank loan this year. But Robinson said the SAC-5 tranche will not be made available earlier than next year. This means that the government will have to cut back on some of its planned expenditures.

FUTURE OF WORLD BANK SUPPORT

YEREVAN (Yerkir)–Speaking to Yerkir reporters about SAC-5– Robinson said that the Structural Adjustment Credits are quite a large amount for Armenia. "The budget realization has really been improving every year. The implementation of the 2002 budget shows a large improvement compared to the 2001 budget," he said.

"Though it is still in its early stage–the 2003 budget looks clearly better," Robinson said yesterday at his first news conference in Yerevan. He also added that he was unsure whether the World Bank would stop supporting the budget by 2004. It is possible that the World Bank adopt a different work style in the form of a "project credit."

"For instance–under the poverty reduction strategic program we can mention the social–educational–social security problems. Through project loans we can specify the amounts for those goals–meaning that after the money goes to the budget it will then be earmarked for certain goals. I hope in coming four or five years our support to the budget will decrease," Robinson said.

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