YEREVAN (RFE/RL)–The Armenian government and the World Bank have overcome most obstacles to the release of a $25 million loan tranche vital for Yerevan to meet its basic spending targets for this year–a senior Bank official said on Thursday.
Judy O’Connor–who runs World Bank programs in Armenia and Georgia–told reporters in Yerevan that she will make a recommendation to the Bank’s board of executive directors on the disbursement of the funds "very early next week."
"Assuming that all goes well–these funds could be made available a couple of weeks thereafter," O’Connor said. She said "there are still a number of minor issues to be clarified," adding that they are "many fewer than they were six weeks ago."
The money in question is the third and last installment of the World Bank’s $65 million Structural Adjustment Credit which goes to cover a large part of the government’s budget deficit this year. The release of the tranche is mainly held up by the government’s worse-than-expected revenue collection in the fourth quarter of the year. "There have been arrears in the execution of the current budget that are due to be resolved within the next couple of weeks," O’ Connor said.
According to Economy Minister Armen Darbinian–the cabinet may be forced to further cut its expenditures to keep the deficit within the planned level. Darbinian spoke to RFE/RL after outlining the main parameters of next year’s draft budget at a government session on Thursday. He said its final version will be ready by next Monday. He said the original draft submitted to the parliament last month has been revised downwards in line with Western lenders’ insistence that it be "less risky." It projects a deficit equal to five percent of gross domestic product.
The successful implementation of the 2000 spending bill hinges on continued deficit-funding from the World Bank and other external sources. O’Connor said the amount of the next SAC credit has yet to be clarified. The World Bank has been Armenia’s biggest lender–with a total of $535 million in loans disbursed to date.