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The World Bank Board of Directors today discussed a new Country Partnership Strategy (CPS) with Armenia, which provides the framework guiding the World Bank's assistance to Armenia for 2009-2012, World Bank Yerevan office reports.

This Strategy, prepared at a time when Armenia is rocked by the global economic crisis, is intended to assist Armenia to resume growth and reduce the impacts of the crisis on the poor. It also aims to help Armenia lay the foundation for a more competitive economy—a key requirement for diversified and sustainable growth.

The strategy reflects Armenia’s eligibility for International Bank for Reconstruction and Development (IBRD) borrowing, which has stemmed from Armenia’s success in reducing poverty by fifty percent over the last 10 years. The Strategy also encompasses operations of the International Finance Corporation (IFC)—the World Bank Group’s private sector arm that lends to private companies. In addition to its lending operations, the World Bank will provide a range of analytical and advisory services in support of Armenia's development agenda.

According to experts Armenia has benefited tremendously from openness to global trade and investment, and its future is closely linked to better integration with the global economy. However, the country has been struck by a steep fall in demand for its exports, a collapse of metal prices, and a sharp decline in remittances and foreign direct investment. These have led to a severe economic contraction in 2009, lower fiscal revenues, and rising unemployment and poverty.

“In a difficult global environment, Armenia faces the simultaneous challenges of reducing the impacts of the crisis on the poor, and laying the foundations for rapid recovery and sustained post-crisis growth,” said Asad Alam, World Bank Regional Director for South Caucasus. “To help Armenia succeed in this, the World Bank is scaling up its efforts, through both additional financing and intensive dialogue. The three IDA Fast-Track projects recently launched in Armenia were prepared very quickly and are already generating local employment.”

The new CPS is firmly grounded in Armenia’s Sustainable Development Program (SDP), which is built on the two challenges of addressing vulnerability (for the short-term) and strengthening competitiveness for post-crisis growth (for the long-term). The World Bank Group will extend $670-700 million in financing to Armenia under the Strategy, of which $150 million will be low interest IDA credits; $395 million will be IBRD lending, and some $120-160 million will go to the private sector through the IFC.