Press release number: IFAD 04/05

Rome, 28 January 2005 - The President of Armenia, Robert Kocharian, visited the Rome headquarters of the International Fund for Agricultural Development (IFAD) today for the signing of a US$15.3 million loan agreement to help his country’s rural economy.

The loan will support the Rural Areas Economic Development Programme, which aims to increase the incomes of rural poor people and stimulate the growth of enterprises in the mountain areas of seven disadvantaged administrative districts, which cover about 80 per cent of the country.

The programme builds on the progress made by IFAD’s three previous interventions in Armenia, which involved total financing of US$36.5 million from the Fund. All have helped people in poor rural communities to improve their food security, earning potential and, more recently, to meet the challenges of a market economy.

The new programme is financed largely by IFAD. The OPEC Fund for International Development has given a loan of US$5 million, and the United States Agency for International Development (USAID) is processing a grant proposal of about US$600,000. Contributions from domestic resources (private banks, beneficiaries and the Government) amount to approximately US$3.25 million. The loan is on highly concessional terms.

The loan agreement will be signed by Lennart Båge, the President of IFAD, and Davit Lokyan, the Armenian Minister of Agriculture. The Armenian delegation will also include Vardan Oskanian, the Minister of Foreign Affairs, and Karen Chshmaritian, the Minister of Trade and Economic Development.

Despite economic growth in recent years, output in Armenia is still only about 65 per cent of its 1990 level and there is widespread poverty, particularly in mountain areas. The new programme targets unemployed men and women, small and medium farmers, 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 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.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world's poorest people - 900 million women, children and men - 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, totaling US$ 6.5 billion. IFAD has invested about US$ 3 billion in these initiatives. Co-financing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help more than 100 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$ 8.5 billion in 677 projects and programmes that have helped more than 250 million poor rural men and women achieve better lives for themselves and their families.