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The European Bank for Reconstruction and Development is extending a $10 million loan in three trenches to enable VTB Bank Armenia to offer credit to micro and small sized enterprises (MSEs) across the country, reports the “VTB Armenia” bank.

The project will enable the creditworthy MSEs in Armenia have access to medium-term reliable sources of finance. The program is under Armenia Multi-Bank Framework Facility II. The loan will be accompanied by technical assistance under the Armenia Microlending Program, an institution-building Technical Cooperation Program designed to facilitate the MSE lending activities of partner banks. Technical cooperation funds have been provided by the EBRD’s Early Transition Countries Multi-donor Fund and Shareholders’ Special Fund.

VTB Bank Armenia, ranking fourth by total assets, is an important player in the Armenian banking sector; it has the largest branch network in the country. With its 78 branches across the country and new products and services for the lower income groups, VTB Bank Armenia is expected to contribute to the development of Armenia’s MSE sector, including in the rural areas.
“Micro and small enterprises are the backbone for a developing economy. There is a significant unmet demand for MSE finance in the country”, said Chikako Kuno, Director of the EBRD’s Group for Small Business. “This facility gains particular prominence in the current environment of global liquidity constraints and with VTB Bank’s wide regional presence we hope to increase financial access for the rural, micro and small entrepreneurs in the country”, added Ms. Kuno.
The EBRD is committed to the development of the MSE sector in its countries of operation. Its Group for Small Business manages long-term MSE financing programs in 15 countries and has acquired substantial experience in building MSE lending operations. Promoting micro and small companies is one of the Bank's top priorities in Armenia and, indeed, across the entire region in which it operates
EBRD is the largest single investor in Armenia having invested some EUR 202 million in 52 projects in all major sectors of the economy. The country is part of the Early Transition Countries Initiative, launched in April 2004, which uses a streamlined approach to financing to mobilize more investment and encourage economic reform.

According to the source, the EBRD, owned by 61 countries and two intergovernmental institutions, aims to foster the transition from centrally planned to market economies in central and Eastern Europe and central Asia.