EUROPEAN COMMISSION PROPOSES 100 MILLION EURO MACRO-FINANCIAL ASSISTANCE TO ARMENIA
armradio.am
16.10.2009 16:36
The European Commission proposed to the Council to provide
macro-financial assistance to Armenia, in the form of a loan of up to
65 million euro and of a grant of up to 35 million euro. The assistance
will support the adjustment programme agreed by the Armenian government
with the International Monetary Fund to help the country through the
global crisis.
The Commission adopted on the 14 of October 2009 a draft decision
recommending to the Council to provide macro-financial assistance
(MFA) in the form of a loan of 65 million euro and of a grant of
35 million euro to Armenia. The assistance would be provided in
two instalments, tentatively in the first and fourth quarter of
2010. The assistance supports, and is conditional on the respect
of the adjustment programme agreed between Armenia and the IMF. It
complements the latter’s financial assistance to the country. The
European Parliament is consulted.
The proposed financing will complement the financial resources provided
by the EU, in the form of budget support programmes financed under
the European Neighborhood and Partnership Instrument.
The global economic crisis has affected Armenia since the last quarter
of 2008. As the country’s economic activity and external situation
started to deteriorate, Armenia agreed an about USD 540 million
Stand-By Arrangement programme with the IMF in March 2009. In the light
of a substantial worsening of the economic conditions, the IMF decided
in June 2009 to approve an augmentation of its resources by about
USD 250 million. Armenia’s GDP is foreseen to decrease by 15.6% in
2009, the budget deficit to reach 7.5% of GDP and the current account
deficit to reach 13.7% of GDP. A slow recovery is expected in 2010.
Other international donors like the World Bank and the Asian
Development Bank support Armenia’s economic adjustment effort along
with other bilateral donors.
MFA is an exceptional EU crisis response instrument available to
EU neighbours. It is conditional and complements assistance by the
IMF. The IMF capacity to help countries with financial difficulties
is being considerably increased by EU Member States and other IMF
members. The EU recently committed to provide 125 billion euro to the
IMF, which is 35% of the increase in the IMF’s lending capacity from
USD 250 billion to USD 750 billion.