World Bank Support For Armenia’s Structural Reform Program (SAC-5)

Yerevan, March 14, 2003 – The World Bank’s Board of Executive Directors yesterday approved a US$40 million equivalent (SDR 30.2 million) fifth Structural Adjustment Credit (SAC5) for Armenia.  The International Development Association (IDA) credit supports the main elements of the Government’s reform program outlined in the draft Poverty Reduction Strategy Paper (PRSP).  This credit, the fifth in a series of adjustment credits for Armenia, is also fully consistent with Armenia’s Country Assistance Strategy, a document that details the Bank’s two- to three-year program in the country.

The SAC5’s major benefit is its provision of foreign exchange to support balance of payments and non-inflationary budget financing.  In addition to supporting the Government’s policy of eliminating administrative barriers for private sector development, and advancing social sector reforms the credit will help maintain economic recovery and poverty reduction. 

“The SAC5 aims to help sustain Armenia’s macroeconomic stability, capitalize on the success of the first four structural adjustment credits, and launch reforms in the new area of university education,” explains Armenia Country Manager Roger Robinson.

The main objectives of the Credit are to support the Government’s efforts in:

(1) Developing the private sector and accelerating public enterprise reform to facilitate sustainable growth and employment and reduce the public costs of operating non-viable SOEs.  Private sector development is the core tenet of Armenia’s economic reform program.  SAC5 supports: (i) improving the business and legal environment; (ii) developing public enterprise reforms; (iii) advancing reforms in public infrastructure; (iv) improving tax and customs administrations; and (v) strengthening the financial sector.   

(2) Promoting reform in public administration and budget management systems to support governance reform and improve efficiency in utilizing existing budgetary resources.  SAC5 supports: (i) implementing the Civil Service Law; (ii) rationalizing the external and internal auditing functions; (iii) improving the regulatory framework of public procurement; and (iv) implementing the medium-term action plan for improving budget management systems.          

(3) advancing social sector reforms to ensure social sustainability of the reforms and reduce poverty.     SAC5 supports: (i) increasing the budget financing of core social services; (ii) achieving higher efficiency in general education; (iii) launching reforms in university education; (iv) advancing health sector reform; (v) improving efficiency in social protection; and (vi) launching implementation of pension system reform. 

The credit will be released in two equal tranches of US$ 20 million equivalent.  The credit will be made to the Republic of Armenia on standard IDA terms, including 40 years maturity and a 10 year grace period. 

Since joining the World Bank in 1992 and IDA in 1993, the commitments to Armenia total approximately USD 737.2 million for 31 projects.    

For more information on the World Bank’s work in Armenia, visit

http://lnweb18.worldbank.org/eca/armenia.nsf