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 The World Bank Board of Executive Directors today approved a package designed to help Armenia protect the poor and support greater human capital development, and also strengthen competitiveness and private sector development. The Second Development Policy Operation (DPO) for Armenia, a loan of US$ 25 million, is the second in a series of three operations designed to support the Government of Armenia in meeting its strategic objectives.

This operation supports the protection of pro-poor spending in the state budget; the targeting of social safety net programs; increased access to pre-school programs in poor communities; and improved efficiency of health services delivery through the introduction of performance-based contracting for treatment of non-communicable diseases.

To enhance Armenia’s competitiveness and raise its growth potential, this Operation helps strengthen the competition framework and implement a new Mining Code adhering to international best practice for fiscal, environmental, social, and licensing standards. It also supports key reforms aiming at improving the business climate and reforming the tax administration.

“This Operation supports the key elements of the Government’s overall reform program that are essential for sustaining the economic recovery and safeguarding the poor and vulnerable,” says Asad Alam, World Bank Regional Director for the South Caucasus Countries. “Sustained reforms in tax, customs, and economic competition, coupled with the introduction of a modern regime for the mining sector that is socially and environmentally responsible, are needed to sustain the recovery and generate jobs; but it is still important for the country to maintain the coverage of the social safety nets while at the same time increasing their efficiency.”

“The proposed program supports a prioritized and coherent package of reforms needed to diversify the economy, make Armenia more competitive, continue modernization of the public sector through introduction of conflict of interest regulation, and promote growth over the medium term,” says Pedro L. Rodriguez, Task Team Leader of the World Bank Team that designed the project. “This is particularly important since the restoration of high growth rates is essential to rapidly improve the lives of people in Armenia.”
“The World Bank is committed to support the authorities’ efforts in all these important agendas over the long term and, in this regard, a third DPO under preparation expects to continue the focus on post-crisis competitiveness and growth and on the strengthening of health, education and safety net programs,” says Jean-Michel Happi, the World Bank Country Manager for Armenia.

The Second DPO includes an IDA credit equivalent of US$ 21 million and an IBRD loan of US$ 4 million. The IDA credit carries a maturity of 20 years including a grace period of 10 years and the IBRD loan has a maturity of 25 years including 10 year grace period.

Since joining the World Bank in 1992 and IDA in 1993, the commitments to Armenia total approximately US$ 1, 433 million.