51060-003: Public Efficiency and Financial Markets Program (Subprogram 2) | Asian Development Bank

Armenia: Public Efficiency and Financial Markets Program (Subprogram 2)

Sovereign (Public) Project | 51060-003 Status: Active

The proposed program is the second of two subprograms within the current programmatic assistance approach of ADB in Armenia. It supports the government reform efforts in the areas of public debt and fiscal risk management, and financial and capital markets development. Specifically, the proposed program will continue to: (i) strengthen public debt and fiscal risk management, in support of the Authorities' fiscal consolidation efforts and attempts to reduce financial risks in the economy; (ii) improve money market liquidity and financial market transparency, by deepening the government securities market and improving money market infrastructure; and (iii) foster the development of corporate debt and equity markets, by enhancing corporate transparency and developing legislative frameworks for new instruments and investment vehicles. The first sub-program for $40 million was approved in October 2017; this second sub-program, for $50 million, is expected to be approved in October 2018.

Project Details

Project Officer
Farinha Fernandes, Joao Pedro Central and West Asia Department Request for information
Country
  • Armenia
Sector
  • Finance
 
Project Name Public Efficiency and Financial Markets Program (Subprogram 2)
Project Number 51060-003
Country Armenia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3735-ARM: Public Efficiency and Financial Markets Program (Subprogram 2)
Ordinary capital resources US$ 50.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
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 program is the second of two subprograms within the current programmatic assistance approach of ADB in Armenia. It supports the government reform efforts in the areas of public debt and fiscal risk management, and financial and capital markets development. Specifically, the proposed program will continue to: (i) strengthen public debt and fiscal risk management, in support of the Authorities' fiscal consolidation efforts and attempts to reduce financial risks in the economy; (ii) improve money market liquidity and financial market transparency, by deepening the government securities market and improving money market infrastructure; and (iii) foster the development of corporate debt and equity markets, by enhancing corporate transparency and developing legislative frameworks for new instruments and investment vehicles. The first sub-program for $40 million was approved in October 2017; this second sub-program, for $50 million, is expected to be approved in October 2018. A transaction technical assistance (TA) has facilitated reform preparation and implementation during both subprograms.
Project Rationale and Linkage to Country/Regional Strategy

Subprogram 2 reforms bring to fruition a number of key legal and institutional game-changers for financial markets development in Armenia, thus sustaining the benefits of complementary reform processes implemented in Subprogram 1, and puts in motion new reform processes that the proposed post-program engagement framework will help bring to fruition. In general, financial/Capital markets can improve risk sharing and the risk-management efficiency with which financial resources are allocated in a real economy. This can boost economic growth and welfare. But in particular, the development of the financial markets is crucial for Armenia because it would:

1. Support government funding in the domestic market, thereby reducing the currently very-high foreign currency exposure;

2. Support the traction of monetary policy levers and provide suitable instruments for the authorities to deal with macroeconomic shocks and the increased risks to financial stability of high dollarization;

3. Develop local capital markets, on the back of the development of an effective government securities market, to enable banks' maturity transformation, companies' and households' access to local currency borrowing (reducing foreign currency exposures in private sector balance-sheets over time);

4. Improve efficiency of capital allocation and intermediation between investors and borrowers, particularly where adequate disclosure and legal framework to protect investor and borrowers are more crucial for the channeling of savings into productive investment.

Impact Fiscal sustainability and resilience in the finance sector increased by 2020
Project Outcome
Description of Outcome Depth of financial markets increased
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Public debt and fiscal risk management policies strengthened

2. Government's securities market and money-market infrastructure improved

3. Base of instruments and investors broadened, and corporate transparency enhanced

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Farinha Fernandes, Joao Pedro
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance (MOF)
[email protected]
1 Melik Adamyan, Yerevan
Armenia
Timetable
Concept Clearance -
Fact Finding 17 Jun 2018 to 26 Jun 2018
MRM 03 Sep 2018
Approval 09 Nov 2018
Last Review Mission -
Last PDS Update 09 Nov 2018

Loan 3735-ARM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
09 Nov 2018 09 Nov 2018 03 Dec 2018 31 Dec 2018 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 50.00 Cumulative Contract Awards
ADB 50.00 09 Nov 2018 50.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 09 Nov 2018 50.00 0.00 100%

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Tenders

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Contracts Awarded

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Procurement Plan

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