YEREVAN (RFE/RL)–Armenia has received a new $25 million loan from the World Bank which will cover a considerable part of its budget deficit–the Bank’s representative in Armenia’said on Wednesday. Oweiss Saadat told reporters that the money was made available on Tuesday.
The crucial payment is the second tranche of the World Bank’s $65 million Structural Adjustment Credit. Its disbursement was originally expected last June–but was frozen due to the government’s higher-than-projected budget deficit. The International Monetary Fund has also delayed its next loan tranche as a result.
The Armenian parliament last month approved the government’s package of austerity measures aimed at tackling the extra spending gap of $58 million. The move paved the way for the disbursement of the frozen loans. Government officials hope the World Bank’s tranche will help them pay all back salaries and pensions in the public sector in the next two weeks. The cabinet of Prime Minister Vazgen Sargsyan had to cope with the budget crisis immediately after it took office three months ago.
The Bank’s Saadat said the government has "kept economic reform on its right track." He said the government’s next "challenge" is to secure the third and last SAC tranche worth about $23.5 million. Talks are underway with Yerevan on its release later this year–he said.
Also praising the government was a senior IMF official who said last week that its commitmen’s to Western lenders "have been mainly fulfilled."
An Armenian government delegation led by Sargsyan will take part in the annual meetings of the World Bank and IMF in Washington from September 28 to 30. Sargsyan is scheduled to meet with James Wolfensohn–the Bank’s president. Wolfensohn visited Armenia in early June pledging more support for the country’s transition to a market economy.
The World Bank is Armenia’s main creditor–with $535 million borrowed by Yerevan to date. This makes up about two thirds of Armenia’s external debt. Saadat said implementation of the loan programs has been overall successful–but he strongly complained that frequent check-ups and audit of government agencies using the Bank’s funds threatens to disrupt their work. He said the government should rule out undue pressure on those agencies from law-enforcement and tax collection bodies.