UN agency grants Armenia new loan to boost its impoverished rural economy

With output in Armenia still only about 65 per cent of its level in 1990 when it gained independence from the former Soviet Union, the United Nations is granting a new $15.3 million loan to help boost the economy of rural areas, which cover about 80 per cent of the impoverished Caucasus country.

Armenian President Robert Kocharian today visited the Rome headquarters of the International Fund for Agricultural Development (IFAD) to mark the agreement, which was being signed by IFAD President Lennart Båge and the Armenian Agriculture Minister Davit Lokyan.

The loan, on highly concessional terms, will support the Rural Areas Economic Development Programme, building on the progress made by IFAD’s three previous initiatives in Armenia, which involved total financing of $36.5 million to improve food security in rural areas and meet the challenges of a market economy.

The new programme targets unemployed men and women, small and medium farms, rural entrepreneurs, agro-processors and traders. It consists of a package of measures, including: loans for investment and working capital; grant-financing of small-scale infrastructure; and training in developing a business. It is expected that thousands of small- and medium-sized enterprises in rural areas will be created or enlarged as a result.

The programme also aims to increase returns from farm labour, bringing higher levels of disposable income and to facilitate farmers’ access to markets. Most of the funds will be channelled through private banks and other financial institutions by means of an innovative refinancing facility.

IFAD is a specialized UN agency dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world’s poorest people – 900 million people – live in rural areas and depend on agriculture and related activities for their livelihoods. Through low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty themselves.

There are close to 200 ongoing IFAD-supported rural poverty eradication programmes and projects worldwide, totalling $6.5 billion. IFAD has invested about $3 billion in these initiatives.