ADB Approves €89.47M Loan to Enhance Armenia’s Fiscal Sustainability and Financial Market Development

The loan, made in collaboration with Agence Française de Développement, focuses on essential reforms that promote effective fiscal governance.

The Asian Development Bank (ADB) has granted an €89.47 million ($100 million equivalent) policy-based loan to support Subprogram 2 of Armenia’s Fiscal Sustainability and Financial Markets Development Program. This initiative aims to bolster Armenia’s fiscal management and expand its financial markets, aligning with the nation's strategy to enhance governance, ensure economic stability, and accelerate climate action.

The loan, made in collaboration with Agence Française de Développement, focuses on essential reforms that promote effective fiscal governance. Key objectives of the reforms include improving multi-year budget planning, enhancing procurement governance, and strengthening public debt management, fiscal risk assessment, and public investment management.

In addition to fiscal reforms, the program is designed to develop liquid money markets, foster investor confidence, and improve corporate transparency and governance. These changes are crucial for attracting investments and ensuring a more resilient financial environment in Armenia.

ADB emphasizes that Armenia’s commitments to climate change action will also be advanced through these reforms. By integrating environmental considerations into public financial management systems and financial sector policies, the program aims to embed climate adaptation and mitigation efforts into the economic framework.

“The reforms will stimulate the financial sector and access to finance, positioning Armenia as a more robust economy resilient to external risks,” said Yevgeniy Zhukov, ADB Director General for Central and West Asia. This sentiment reflects the broader goal of creating a sustainable financial landscape that can withstand global economic fluctuations.

Subprogram 2 builds on the achievements of Subprogram 1, which successfully laid the groundwork for reducing fiscal vulnerabilities and enhancing investor confidence in Armenia's financial and capital markets. ADB Principal Financial Sector Economist João Farinha-Fernandes remarked, “This program is a vital step in promoting fiscal effectiveness and bolstering Armenia's capacity to manage fiscal risks and public investments effectively, creating foundations for sustainable growth.”

The strategic reforms supported by this loan will not only strengthen Armenia's fiscal framework but also improve its capacity to manage public investments effectively. By laying these foundations, ADB aims to help Armenia achieve sustainable economic growth while addressing pressing climate challenges. The partnership between ADB and the Armenian government signifies a commitment to advancing fiscal sustainability and financial market development as critical components of the nation’s economic strategy.

In light of recent global economic shifts and uncertainties, these reforms are more critical than ever, ensuring that Armenia can navigate challenges and seize opportunities for growth in a rapidly changing landscape.