Armenia seeks to cover budget deficit with World Bank loan

Armenia will receive 92.3 million euros in lending from the World Bank (WB) to pay off the budget deficit.

The WB will lend the amount through the International Bank for Reconstruction and Development (the division of the WB responsible for lending to less poor countries, on near-market terms), Caliber.Az reports, citing Armenian media.

The funds will be used to pay off the budget deficit by implementing new reforms in some directions.

The first is to improve the legal environment, renewable energy and energy efficiency; the second is human resource development (education, human rights protection); the third is reforms in anti-corruption policy and the justice system.

Budget loans are not earmarked for specific programmes; their purpose is to finance current expenditures (payment of salaries, pensions, state health care contracts, etc.).

The draft state budget for 2023 envisages a budget deficit of 3.1 per cent of GDP, compared to 2.5 per cent in 2022. From domestic sources (government bonds in Armenian drams), a total of about 303 billion drams (slightly less than $770 million) is envisaged, and from external sources - minus 14 billion drams ($35 million). This means that the country will repay $35 million more in foreign loans and foreign currency government bonds than it will raise.