Press Release

OPEC Fund extends US$5 million to Armenia for rural economic development project

36/2005 April 21, 2005, Vienna, Austria

The OPEC Fund for International Development today signed a US$5 million loan agreement with the Republic of Armenia in support of an initiative to increase sustainable incomes among needy rural communities by stimulating the growth of rural enterprise activity.

Focusing on the seven provinces of Shirak, Lori, Tavush, Gegharkunik, Vayats Dzor, Syunik and Aragotsotn, the project seeks to enable small farmers to move away from subsistence agriculture to other, more sustainable forms of employment.

At present, the majority of cultivable land in Armenia is owned by peasants, who grow food on small plots for personal consumption. Government envisages rural enterprise development as playing a pivotal role in raising income and employment among these people.

Armenia’s rural sector exhibits many of the classic constraints to production and profitability: Farmers’ technical knowledge and skills are limited; and the equipment and machinery used are outdated. This results in low yields, together with soil and pasture degradation. In addition, the infrastructure, institutions and instruments necessary for the efficient operation of a market-oriented rural economy are lacking.

To stimulate commercial activity and encourage people to diversify into other areas of work, the project will provide financial services for small and medium-scale rural enterprises, together with business intermediation services to assist the less experienced entrepreneurs. Another component will help alleviate constraints imposed by the poor condition of essential infrastructure, such as water and energy supplies, sanitation and rural roads, by supporting public/private investment in small-scale, commercially derived infrastructure.

An estimated 1.3 million people are expected to benefit from the project, which represents the OPEC Fund’s first development operation in Armenia.

Today’s agreement was signed in Vienna by H.E. Mr Jivan Tabibian, Ambassador of the Republic of Armenia to Austria, and by H.E. Mr. Jamal Nasser Lootah, Chairman of the Governing Board of the OPEC Fund.

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