Press Release

OPEC Fund and Armenia sign investment encouragement and protection agreement

15/2005 February 23, 2005, Vienna, Austria

An agreement for the encouragement and protection of investment has been signed between the OPEC Fund for International Development and the Republic of Armenia. Drawn up within the framework of the Fund's Private Sector Facility, the agreement was signed by HE Mr. David Lokyan, Minister of Agriculture of the Republic of Armenia, and by Mr. Suleiman J. Al-Herbish, Director-General of the OPEC Fund.

The Fund's Private Sector Facility is a financing window, endowed with its own resources, through which the Fund channels support directly to the private sector in developing countries. Its objectives are to promote economic development by encouraging the growth of productive private enterprise and supporting the growth of local capital markets. Under the Facility, loans are made to financial institutions for on-lending to small, medium and micro-enterprises, as well as directly to specific projects. Equity participation in private enterprises is also undertaken. The investment protection agreement accords the OPEC Fund the same privileges as those normally given to international development institutions in which the country holds membership. To date, the Fund has concluded such agreements with over 60 countries.

With a population of just 3.1 million and a GNI per capita of US$950 in 2003, Armenia ranks among the lower middle income group of countries. In recent years, government has pushed ahead with structural reform and trade liberalization, together with a raft of financial sector reforms. Economic performance has been encouraging, with GDP growth reaching a record 13.9% in 2003. The private sector accounts for 91% of GDP. Over two-thirds of small and medium enterprises have been privatized, as have 75% of large companies and most agricultural land. Government is committed to creating an enabling environment for further development of the private sector.

The OPEC Fund's cooperation with Armenia commenced in December 2004, with the approval of a public sector loan in support of a rural areas economic development project. On a cumulative basis, since 1976, the Fund has approved more than US$5,795.7 million in public sector lending to over 100 countries in all developing regions of the world.