Do you think that the regulatory environment and access to credit have been sufficient for the private sector in Armenia over the last few years?
Small and medium sized enterprises (SMEs) are the backbone for a healthy and well functioning economy and EBRD always supports the development of the SMEs sector. Our direct involvement is predicated upon financial transparency, which unfortunately is often lacking. We also support this sector indirectly through SME credit lines with our local partner banks. In natural resources area, one is not dealing with SMEs, but large projects. For EBRD to finance such projects the company has to meet both Armenian regulatory requirements and the EBRD’s corporate governance and environmental standards.
Do you think that the mining sector in Armenia is generally compliant to the EBRD requirements?
I can talk only about the projects which we would consider financing. On one such project, we are currently waiting for the Ministry of Nature Protection to approve the Environmental Impact Assessment (EIA) but we are surprised and somewhat disappointed with the recent announcement that they require another 230 days to make a decision. The Environmental and social impact assessment (ESIA), which is required by the EBRD for financing this project should be finalized in July and should enable us to assess whether this project meets our very high standards. Delaying the start up of this project without proper justifications can send wrong signals to the market with negative implications on the FDI.
So far, you’ve had only one partner in the mining sector in Armenia – Lydian International. Does the EBRD have any plans in increasing its equity portfolio?
Currently Lydian is our only mining partner in Armenia. We are confident that they would only operate under high environmental standards. Should this be demonstrated, we would be prepared to consider financing the Amulsar project. We do not currently have in our pipeline more equity investments in the mining sector in Armenia.
Are you happy with the engagement of civil society? Are the NGO's competent and adequate enough?
We always engage with NGO's and have a very healthy dialogue with them. We also expect from NGOs to demonstrate the same transparency which we expect from our clients.
Is EBRD planning to embark on other large-scale infrastructure projects, after a major project of construction of a new terminal at Zvartnots international airport?
The Bank recently has approved its new strategy for Armenia, you can see the full strategy on http://www.ebrd.com/downloads/country/strategy/armenia.pdf . The main strategic priorities that Bank is going to focus are as follows:
Developing the financial sector and improving access to finance. The Bank will focus on providing its traditional SME and micro-finance lines targeting areas outside the capital city and facilitating access to credit for SMEs in the rural areas. In rural areas, the EBRD will launch agricultural credit lines in local currency.
Improving municipal and urban transport infrastructure. The Bank will support the water and waste water sectors introducing cost-reflective tariff structures, improving service availability, as well as urban and municipal transport reforms including the introduction of integrated transport management and ticketing systems, better parking management and regulation of feeder bus and minibus services.
Developing agribusiness and high value-added, export-oriented industrial companies. The Bank will identify investments in industries with export potential, including in areas highlighted by the authorities’ recent program of export promotion. EBRD will aim to support the agricultural sector by targeting investments along the whole value chain.
Improving the regulatory and institutional framework for sustainable energy and increasing value-added in the mining sector. The Bank will support investments in financially viable renewable energy projects and, through partner banks, continue to finance energy efficiency credit lines for industrial and residential users. The Bank will support power generation, particularly new entrants and non-state participants, and will consider participating in regional electricity infrastructure projects that strengthen competition in the regional electricity market. The Bank will support bankable mining operations with reputable investors who demonstrate high standards of environmental and social protection.
Armenia’s medium-term prospects depend to a large extent on the authorities’ ability to create conditions for investment and productivity improvements. In the coming years, the Bank will continue its policy dialogue with the authorities on improving the business environment in Armenia. Through the Bank-funded Business Support Office, the public-private dialogue will be strengthened and expanded to deal effectively with various issues that impede doing business in Armenia.
By Aram Gareginyan