YEREVAN, December 6. /ARKA/. The Council of the Eurasian Fund for Stabilisation and Development (the EFSD, the Fund) has approved disbursement of the second tranche of the EFSD financial credit of US$ 100 million to the Republic of Armenia. The key areas of reforms supported under the EFSD programme include strengthening the financial soundness of the energy sector, raising the efficiency of the public finance management, and improving the investment climate. In the framework of the programme, the reforms to promote de-dollarization of the economy, greater credibility of the banking sector, and higher exports have also been continued. The assessment of Armenia’s performance prepared by the Manager is generally positive.

Implementation of the tranche’s conditionalities had a positive effect on strengthening the financial sustainability of the energy sector. Owing to improved methodologies of tariff margin calculation and the forecast of electricity generation and distribution aimed at greater flexibility of the tariff policies and enabling demand and supply shock smoothing, the Electric Network of Armenia CJSC [closed joint-stock company] has fully repaid accumulated arrears to the Armenian NPP, Yerevan CHP, and the High-Voltage Network totalling US$ 50 million that is equivalent to 56% of the companies’ electricity supply (turnover) over the period of the arrears repayment (December 2015 - July 2016).

A range of legislative acts have been developed to improve the efficiency of the public finance management. In early October 2016, the National Assembly of Armenia adopted the first ever national Tax Code that streamlines and improves the tax legislation in the framework of a single document. With the Tax Code coming into effect, the tax potential of the economy will be significantly strengthened—the cumulative growth of tax revenues in 2017-2021 is estimated at 2% of GDP—and the tax policies will become more stable and predictable. Amendments to the Procurement Law have been presented for the consideration of the National Assembly of Armenia to expand the practice of electronic public procurement for the needs of government bodies, thus facilitating more efficient budget spending and reducing risks of corruption. The reforms to improve the investment climate have been continued.

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Tags: Armenia, EFSD, financial credit

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