ADB Signs $19M Local Currency Deal to Boost MSMEs and Green Finance in Armenia

The transaction marks a major milestone for Armenia’s financial sector, as it represents ADB’s first private sector operation in local currency in the country.

The Asian Development Bank (ADB) has signed a financing package of up to $19 million with Armeconombank Open Joint Stock Company (AEB) to expand access to finance for micro, small and medium-sized enterprises (MSMEs) and households across Armenia. The initiative places a strong emphasis on women-led businesses and green investments, supporting inclusive growth and climate resilience in the country.

The financing package consists of two components: a loan equivalent to $15 million in Armenian dram from ADB’s ordinary capital resources, and a $4 million concessional loan from the Canadian Climate and Nature Fund for the Private Sector in Asia (CANPA). By blending commercial and concessional finance, the project enables AEB to provide longer-tenor and more affordable loans to underserved market segments.

The transaction marks a major milestone for Armenia’s financial sector, as it represents ADB’s first private sector operation in local currency in the country. Local currency lending is particularly important for Armenian businesses and households, as it reduces exposure to foreign exchange risk and improves financial stability for borrowers with revenues denominated in dram.

Speaking on the agreement, ADB Deputy Country Director for Armenia Luke Fochtman highlighted the importance of expanding access to local currency financing. He noted that the project will help MSMEs—especially women-led enterprises—secure the capital they need to invest, grow and contribute to a more inclusive and resilient Armenian economy, while also accelerating sustainable investments.

MSMEs play a central role in Armenia’s economy, accounting for a significant share of employment and business activity. However, many face high barriers to credit, including limited access to long-term financing and high borrowing costs. At the same time, demand for clean energy and energy-efficient technologies is rising, but adoption remains constrained by high upfront costs and long payback periods.

The blended finance structure of the ADB–AEB partnership directly addresses these challenges. It will allow AEB to extend longer-maturity and competitively priced loans for investments such as small-scale renewable energy systems, energy efficiency upgrades and other climate-friendly technologies. These loans will be available not only to MSMEs but also to households, helping reduce energy costs and carbon emissions while strengthening energy security.

In addition to financing, AEB will receive support through ADB’s Advancing Green Finance for Sustainable Development Technical Assistance. This assistance will help the bank strengthen its sustainable finance practices, enhance gender-responsive lending approaches and further develop its energy efficiency and green lending frameworks, ensuring long-term institutional capacity building.

The concessional portion of the financing is provided by CANPA, a trust fund managed by ADB and supported by a Can$360 million commitment from the Government of Canada. Established in 2024, CANPA builds on the success of its predecessors—the Canadian Climate Fund for the Private Sector in Asia (CFPS) and CFPS II—and focuses on supporting private-sector projects that deliver climate and nature-based solutions, while also promoting gender equality. This project represents ADB’s first financing commitment in Armenia under the three Canadian climate funds.

Founded in 1991, Armeconombank is one of Armenia’s longest-established financial institutions, operating a nationwide network of 54 branches. Armenia became a member of ADB in 2005, and since then the Bank has committed more than $2 billion in loans, grants and technical assistance to support the country’s economic development, infrastructure, financial sector and climate resilience.

Overall, the new financing package underscores ADB’s growing role in supporting private sector-led, inclusive and green growth in Armenia, while strengthening the capacity of local financial institutions to serve MSMEs and households more effectively.