Yerevan in Search of More Foreign Loans

YEREVAN (RFE/RL)–Armenia is seeking additional loans from foreign donors and lending institutions to cushion the growing effects of the global economic crisis on its economy, Labor and Social Affairs Minister Arsen Hambardzumian said on Thursday.

Hambardzumian said the Armenian government is currently negotiating with the World Bank, the International Monetary Fund, the Manila-based Asian Development Bank and other potential lenders for that purpose.

“We have already gone through a certain negotiating process,” he told RFE/RL. “There is a readiness, there are programs that have been tentatively approved. But there are some issues that require further discussion.”

The World Bank and the IMF pledged earlier this year to allocate a total of over $1 billion in anti-crisis loans to Armenia in the coming years. Some of these loans worth roughly $320 million have already been disbursed. The Armenian government is also expected to receive a $500 million “stabilization credit” from Russia by June.

Hambardzumian did not specify the amount of extra funds sought by Yerevan and how it plans to spend them. He said only that the money is meant to ease “social tension” in the country.

The Armenian economy contracted in the first quarter of this year for the first time since the early 1990s, resulting in a sizable drop in the government’s tax revenues. Citing the revenue shortfall, the government decided last week to delay 14 percent of its expenditures envisaged by the 2009 state budget until the fourth quarter.

Vartan Bostanjian, deputy chairman of the Armenian parliament’s economic committee, admitted that the move is a prelude to a downward revision of the budgetary targets. “In reality this is nothing but a cut in expenditures which is called a sequestration,” he said.

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