WB canceled an additional 1.7% interest rate on loans from IDA for Armenia for a year
For one year, the World Bank canceled an additional 1.7% interest rate on loans from the International Development Association (IDA) for Armenia. According to the estimates of the WB and the Ministry of Finance of the Republic of Armenia, as a result of the one-year cancellation of this rate, the state budget of Armenia will save about $ 13 million on interest payments on foreign debt.
"Due to coronavirus infection, the economic situation in all countries of the world is expected to deteriorate in 2020. Given this circumstance, international financial institutions are trying as much as possible to help Member States to overcome the consequences of the pandemic. In this context, the World Bank informed about the possibility of cancellation for year of the earlier decision to apply an additional interest rate (1.7%) on many loans granted to Armenia by IDA, "the report says.
On May 7, 2020, the Ministry of Finance of the RA made an official request to the World Bank. A response letter from the World Bank followed on June 4, 2020, stating that the request of the Armenian side was satisfied, in particular that the indicated additional interest rate would not be applied during the financial year 2021 of the World Bank (from July 1, 2020 to June 30, 2021).
According to the RA Ministry of Finance, as of May 31, 2020, the balance of the government debt on IDA loans amounted to $ 981 million (or 14% of the government debt), of which an additional interest rate applies to $ 763 million.
To recall, after a proper study of the economic situation in Armenia, the Board of Executive Directors of the International Development Association decided to tighten lending conditions for most of the loans previously granted to Armenia, increasing the interest rate fixed by loan agreements, which was applied from July 1, 2014.