WB: Armenia Shows Impressive Results

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THE WORLD BANK
NEWS RELEASE
Release No: 2007/267/ECA

Armenia Shows Impressive Results
World Bank Report Shows Country Made Substantial Progress in Alleviating Poverty

WASHINGTON, March 9, 2008—The past two years have been a period of considerable progress for Armenia, including GDP growth rates in the double digits, macroeconomic stability, important policy reforms, and significant progress in combating poverty, according to the Country Assistance Strategy Progress Report (CASPR) for Armenia, discussed yesterday by the World Bank’s Board of Executive Directors.

The Country Assistance Strategy (CAS) is developed every four years between the World Bank and the Government of Armenia, mapping out collaboration for the next four years. The current CAS was prepared in June 2004 and covers the 2005-2008 period. This Progress Report comes at roughly mid-term and reviews progress against agreed and measurable results.

The CAS sets out three broad pillars of engagement: (i) promoting private sector-led economic growth, (ii) making growth more pro-poor, and (iii) reducing non-income poverty. The foundation of the CAS is the policy support provided by a series of development policy loans (PRSCs). Through the PRSCs and other instruments, the Bank is supporting improvements in governance, transparency, and good economic management. The Bank has also helped to strengthen the physical and social infrastructure of the country through investment operations in such areas as irrigation, water supply, renewable energy, electricity transmission, and transportation. The Bank has also been active in supporting health and education reforms in the country. Poverty has declined from around 50 to 30 percent in the last few years, with extreme poverty dropping to below 5 percent. Good progress is also being made in social sector spending and reforms.

The CASPR indicates that the Bank has delivered all of the activities included in the CAS, including both annual policy support and investment lending. Investment lending during the first half of the CAS period included the Rural Enterprise and Agricultural Development Project, Yerevan Water and Wastewater Project, Urban Heating Project, Renewable Energy Project, Avian Influenza Control Project, and the third replenishment of the Social Investment Fund. The CASPR also describes the growing involvement of the International Finance Corporation, the World Bank’s private sector arm, in Armenia.

“Armenia has come a long way over the past few years and should be proud of its accomplishments. The Progress Report provides a clear framework for measuring these achievements,” says Donna Dowsett-Coirolo, World Bank Country Director for Armenia. “The World Bank will continue to support Armenia in sustaining growth, creating jobs, and reducing poverty.”

In light of Armenia’s growing GDP per capita and improving creditworthiness, the CASPR confirms Armenia’s eligibility to begin some limited non-concessional borrowing from the International Bank for Reconstruction and Development, in addition to its soft loan funding from the International Development Association. This is a clear sign that Armenia is entering the ranks of middle income countries. At the same time, the transition will have to be gradual in order to avoid a premature buildup of debt.

The Board of Directors also approved three additional operations alongside the CAS Progress Report—the third Poverty Reduction Support Credit, the Health Modernization Project, and the Judicial Reform II Project. Each of these projects contributes to the overall partnership framework and will be an important addition to Armenia’s efforts to sustain strong growth, improve governance, and reduce poverty.