Armenia Fourth Development Policy Financing

closed

The fourth Development Policy Financing in Armenia will support the government’s efforts to promote fiscal, social, and environmental sustainability and to strengthen competitiveness. The original programmatic series of Development Policy Operations (DPOs) in Armenia comprised three operations. A fourth operation was subsequently added in 2015 to better align it with the government’s reform program and the World Bank’s Country Partnership Strategy (CPS) cycle, to provide the much needed response to a deteriorating macroeconomic context and to strengthen the impact of the supported reforms. This programmatic series of four operations is anchored in the Armenia Development Strategy (ADS) for 2014–25 which was approved by the government in April 2014, and in the CPS for FY2014–17. Originally, the Program Development Objective (PDO) of this DPO series was to support job creation through growth enhancing reforms. However, given the country’s increasing macroeconomic and fiscal vulnerability in the context of a worsening external environment, the PDO was amended (in the third operation under this programmatic series) to support the government’s reform agenda under the following two pillars: (i) promoting fiscal, social, and environmental sustainability; and (ii) strengthening competitiveness. These reforms will ultimately bolster the prospects for the government’s long-term objective of job creation. The first pillar includes measures to increase the fiscal space, improve the financial sustainability of key sectors, enhance the efficiency of social protection programs, and improve environmental safeguards in the mining industry, which accounts for over half of Armenia’s exports. The second pillar includes actions designed to strengthen the business environment, improve trade facilitation and connectivity, and improve access to credit. This is the last operation in the programmatic series of four operations spanning 2013-16, in the amount of US$50 million.