The Armenian Cabinet approved on Thursday a new loan agreement between the Armenian government and the French Development Agency (FDA). Deputy Prime Minister Tigran Khachatryan, who chaired the meeting, noted that the agreement—Loan No. CAM 1030 01—will help finance the 538 billion dram budget deficit planned for 2025.
Finance Minister Vahe Hovhannisyan said at the Cabinet meeting that the €150 million budgetary loan will be directed toward ensuring the efficiency and sustainability of public services and improving the financial sector. He added that the draft authorizes the Minister of Finance to sign the agreement, which is aimed at strengthening financial stability through a budget support program.
“The loan includes the third phase of the multi-year (2019–2025) program and will be implemented with co-financing from the Asian Development Bank,” Hovhannisyan said. According to the terms, the loan will be provided in one tranche, with a repayment period of 20 years, including a one-year grace period. Repayments of the principal amount will be made in 38 equal semi-annual installments between 2026 and 2045, due on June 15 and December 15 each year. The borrower will have the option of selecting a floating interest rate of 3.308 percent or a fixed rate for each installment.
The finance minister outlined the main goals of the program: enhancing the efficiency of public financial management; planning and financing the transition to a low-carbon and resilient economy; strengthening the framework for the issuance and management of government securities; and developing new instruments for financing entrepreneurial activity.
As part of this phase, the government will adopt a strategy for the development of a green and sustainable economy, while the Ministry of Economy will draft a concept for a circular economy. Plans also include expanding the government securities and capital markets, introducing mutual funds and venture capital funds, and creating an electronic platform to monitor government capital expenditures, which have faced delays in recent years. In corporate finance, new measures will be taken to combat fraudulent bankruptcy and strengthen the protection of creditor and investor rights.
The French Development Agency has previously provided Armenia with €215 million in budgetary loans, which are currently being repaid. Similar budget support arrangements are also in place with the International Monetary Fund, the Asian Development Bank, and the Eurasian Fund for Stabilization and Development.
In addition to the loan agreement, the government approved the draft law “On the 2026 State Budget of the Republic of Armenia,” which will be submitted to the National Assembly under the established procedure.
