European Bank to Invest Over 180 Million Euros in Armenia

LONDON (Dow Jones)–The European Bank for Reconstruction and Development (EBRD) Tuesday said it will invest 180 million Euros in Armenia over the next two years.

The development bank said that although the country isn’t greatly exposed to the global financial crisis, it will suffer from a drop in remittances from Armenians working outside the country, and declining exports.

The EBRD said it will provide loans to Armenian banks that will be used to finance companies operating in the country, and will make “selective” equity investments in its leading banks.

“In these circumstances the EBRD will uphold its commitment to support private micro, small and medium-sized enterprises by providing necessary financing for the development of this sector through local partner banks,” the report said. “At the same time, EBRD will foster its support for Armenian banks by offering credits for on-lending, and by introducing such new products as energy efficiency loans. EBRD will selectively pursue equity participation in Armenia’s leading banks and will encourage consolidation of the banking sector.”

In its review of its strategy for the country, the EBRD said reforms have slowed in recent years and a number of issues need to be addressed, including “promoting competition and limiting monopolies, tackling corruption (and) strengthening the financial sector.”

The EBRD was established in 1991 to help countries in Eastern Europe and the former Soviet Union make the transition from centrally planned to market economies.

It is the largest single investor in Armenia, having committed 240 million Euros to 64 projects in the country.

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