The proposed public efficiency and financial markets program aims to strengthen fiscal sustainability and deepen financial markets in Armenia. The program will strengthen public debt and fiscal risk management, deepen the government securities market and money market infrastructure, broaden the base of investors and enhance corporate transparency. The programmatic approach and policy-based loan will support two subprograms implemented during 2017 2018. A transaction technical assistance (TRTA) will be provided.
|Project Name||Public Efficiency and Financial Markets Program (Subprogram 1)|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
Private sector development
|Sector / Subsector||
Finance / Finance sector development - Money and capital markets
Public sector management / Public expenditure and fiscal management
|Gender Equity and Mainstreaming||No gender elements|
|Description||The proposed public efficiency and financial markets program aims to strengthen fiscal sustainability and deepen financial markets in Armenia. The program will strengthen public debt and fiscal risk management, deepen the government securities market and money market infrastructure, broaden the base of investors and enhance corporate transparency. The programmatic approach and policy-based loan will support two subprograms implemented during 2017 2018. A transaction technical assistance (TRTA) will be provided.|
|Project Rationale and Linkage to Country/Regional Strategy||
The economic contraction in the Russian Federation continued to be a drag on Armenia's economic performance in 2016, through financial, trade and remittance channels. Growth slowed substantially to 0.2% in 2016 from 3.0% in 2015. These negative pressures led to a widening of the fiscal deficit to 5.4% of gross domestic product (GDP) in 2016 from 4.8% in 2015 and to further substantial debt accumulation to 57.0% of GDP from 48.8% in 2015. This fiscal position and the prevalence of foreign-currency public debt pose a significant source of risk exposure of public debt to exchange rate movements. To reduce such debt related vulnerabilities and contain fiscal risks, the state budget envisages a substantial reduction in the budget deficit to 2.8% of GDP in 2017, mainly through cuts in capital spending and by containing the wage bill and public pensions. Armenia, however, faces the challenge of being fiscally responsible against a backdrop of slowing economic growth and a limited scope of further spending cuts. With the regional slow down and total public debt surpassing 50% of GDP, the next round of fiscal consolidation will have to be based on domestic revenue mobilization and public spending efficiency.
The current economic environment is also creating pressure on the country's financial system. Currency depreciation expectations are factored in the pricing of financial contracts and increase perception of solvency risks. The slowing down of economic growth is heightening credit risk. Increasing foreign inflows, exchange rate developments and under-developed capital markets played an important role in increasing dollarization in the aftermath of the global financial crisis. Since financial markets in local currency are not developed, the financial sector is characterized by high dollarization and limited mobilization of long-term Armenian Dram (AMD) financing for investment by private and public sectors. Financial dollarization of banks' assets and liabilities exposes banks to foreign exchange and refinancing risks. With the limited use of AMD, both fiscal and monetary policies have little maneuvering space to tackle external macroeconomic shocks and to ensure financial stability. Consequently the role of the exchange rate in macroeconomic and financial stability remains a core concern during external shocks. The deepening of financial intermediation in AMD thus assumes paramount importance.
|Impact||Fiscal sustainability and resilience in the financial sector increased (measured by the Financial Sector Development Index) by 2020|
|Description of Outcome||Depth of financial markets increased|
|Progress Toward Outcome|
|Description of Project Outputs||
Public debt and fiscal risk management policies strengthened
Government's securities market and money-market infrastructure improved
Base of instruments and investors broadened, and corporate transparency enhanced
|Status of Implementation Progress (Outputs, Activities, and Issues)|
|Summary of Environmental and Social Aspects|
|Environmental Aspects||The program is unlikely to have adverse impacts on the environment, require involuntary resettlement, or affect indigenous peoples. It is categorized C for each of these safeguard areas.|
|Involuntary Resettlement||The program is unlikely to have adverse impacts on the environment, require involuntary resettlement, or affect indigenous peoples. It is categorized C for each of these safeguard areas.|
|Indigenous Peoples||The program is unlikely to have adverse impacts on the environment, require involuntary resettlement, or affect indigenous peoples. It is categorized C for each of these safeguard areas.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design|
|During Project Implementation|
|Responsible ADB Officer||Niazi, Tariq H.|
|Responsible ADB Department||Central and West Asia Department|
|Responsible ADB Division||Public Management, Financial Sector and Trade Division, CWRD|
Ministry of Finance (MOF)
1 Melik Adamyan, Yerevan
|Concept Clearance||27 Jun 2017|
|Fact Finding||28 Jun 2017 to 07 Jul 2017|
|MRM||17 Aug 2017|
|Approval||24 Oct 2017|
|Last Review Mission||-|
|Last PDS Update||08 Nov 2018|
|Approval||Signing Date||Effectivity Date||Closing|
|24 Oct 2017||27 Oct 2017||15 Dec 2017||31 Dec 2017||-||30 Dec 2017|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||40.00||Cumulative Contract Awards|
|ADB||40.00||24 Oct 2017||40.00||0.00||100%|
|Cofinancing||0.00||24 Oct 2017||40.00||0.00||100%|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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|Title||Document Type||Document Date|
|Loan Agreement for Loan 3584-ARM: Public Efficiency and Financial Markets Program - Subprogram 1||Agreements||Oct 2017|
|Հանրային արդյունավետության և ֆինանսական շուկաների ծրագիր, Ենթածրագիր 1||Translated PDS||Oct 2017|
|Support to Public Efficiency and Financial Markets Program, Subprogram 1: Report and Recommendation of the President||Reports and Recommendations of the President||Oct 2017|
|Support to Public Efficiency and Financial Markets Program: Concept Paper||Concept Papers||Jun 2017|
|Support to Public Efficiency and Financial Markets Program: Initial Poverty and Social Analysis||Initial Poverty and Social Analysis||Jun 2017|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
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The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
ADB Provides $40 Million to Armenia for Fiscal and Financial Market ReformsADB's Board of Directors has approved a $40 million policy-based loan to help the Government of Armenia’s ongoing efforts to strengthen fiscal sustainability and support the development of financial markets in the country.
No tenders for this project were found.
No contracts awarded for this project were found
None currently available.