YEREVAN (RFE/RL)–Armenia will receive a $500 million anti-crisis loan from Russia this week and spend it over the next few years on a wide range of programs, Finance Minister Tigran Davtian said on Thursday.
Davtian and his Russian counterpart, Alexei Kudrin, signed an agreement on the terms of the loan in Moscow on May 20. The Armenian parliament ratified it on Tuesday.
In an interview with the Arminfo news agency, Davtian said that the credit, repayable in 15 years, will reach Armenia in one installment “in one to three days.”
“Armenia can hardly spend these funds in 2009 and, to all appearances, part of these funds will be spent in 2010 and during the coming few years,” he said. “These are budget funds and will be spent as appropriate.”
The Armenian government plans to spend about $70 million of the sum on completing the protracted reconstruction of the country’s northern regions devastated by the 1988 earthquake. Another $30 million is to be re-lent to small and medium-sized enterprises through local commercial banks.
The government has yet to release a detailed breakdown of how it will spend the rest of the loan aimed at mitigating the effects of the global recession on the domestic economy. Officials have said only that it will be used for financing state budget deficits in 2009 and 2010, establishing a “stabilization fund,” presumably meant to support the national currency, the dram, and providing direct assistance to major enterprises.
Davtian confirmed that the government also plans to channel some of the money into a special fund set up by the Central Bank of Armenia (CBA) to make mortgage loans more accessible and cheaper to the population.
The mortgage scheme is part o the authorities’ broader efforts to shore up Armenia’s construction sector. It has been hit particularly hard by the economic crisis, contracting by 42.4 percent in the first four months of 2009. The slump was in turn primarily responsible for a 9.7 percent contraction of the Armenian economy registered during that period.