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WB canceled an additional 1.7% interest rate on loans from IDA for Armenia for a year

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12.06.2020
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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.

 

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