Yerevan, October 28 - An agreement on economic development of rural areas was signed between Armenia and International Fund for Agricultural Development (IFAD) today in Yerevan. The agreement was signed by RA Minister of Finance and Economy Vardan Khatchatryan and Country Program Manager of IFAD in Armenia Henning Pedersen. The total cost of the project is $20,3 mln., of which $15,3 mln is the credit of IFAD for 40 years at 0.75% interest rate with 10-year privileged term, the rest $5 mln will be granted by OPEC Fund. According to Khatchatryan, the program is targeted at improvement of the income and welfare level of population of mountainous and rural areas of the republic. ''IFAD programs make priceless contribution in problem solution, in particular, they are consonant with the poverty reduction program'', he added. The Minister noted that OPEC Fund participates in program financing for the first time.

The program consists of three components - rural enterprise promotion, development of rural business intermediation services, creation of commercially derived infrastructure (roads, electricity, irrigation water). The program will be implemented in seven provinces - Tavush, Syunik, Gegharkunik, Vayots Dzor, Kotayk, Aragatsotn, Lori and Shirak.

Country Program Manager of IFAD in Armenia Henning Pedersen mentioned that the new program differs from the previous three IFAD programs due to economic component, which is profit-oriented. He added that the basic emphasis of the program is laid on development of small and medium-scale business. In frames of the program it is provided for allotment of long-term privileged credits from $5 thou. to $150 thou. Pedersen informed that the program will cooperate with Armenian banks, in particular, with ACBA Bank.

The first IFAD program was launched in 1996 and was directed to restoration of irrigation networks of Armenia, the objective of the second one was the development of agriculture in Northern-Western regions of Armenia. Participation of IFAD in first program made $8 million, in second one - $15.5 million. The third program on providing agricultural services with the participation of IFAD at $15,5 mln. was completed in October 2004.