US$ 259.7 million
Total project cost
US$ 89.5 million
Total IFAD financing
Armenia’s gross domestic product slumped 42 per cent after the former Soviet Union collapsed then rebounded, growing by more than 10 per cent a year from 2001 to 2008.
But the global financial crisis in 2008, combined with falling remittances, caused the economy to contract by 14 per cent in 2009, according to IFAD’s 2014 President’s Report.
Since 2009 Armenia’s economy has achieved growth in the range 2.2 per cent to 3.6 per cent, with 2.4 per cent recorded in 2016, according to data from the International Monetary Fund.
Yet in 2010, 36 per cent of Armenia’s 3.1 million people lived in rural areas, one third in the capital city of Yerevan, and the rest in small towns. About a quarter of rural households are headed by women. Rural poverty remains a challenge.
Agriculture is a mainstay of the economy. Farmland makes up 70.7 per cent of the country’s land area, and in 2012 farming generated around 20 per cent of GDP. Agriculture provides more than 44 per cent of employment nationwide and 65 per cent in rural areas.
Privatization of agriculture after the collapse of the Soviet Union caused irrigation systems used by former state farms to be largely abandoned as ill-suited to smallholder agriculture.
Today, a combination of high altitudes, numerous small farms and an abundant workforce in some areas favours labour-intensive production of flowers, wine and livestock. But for crops that need scale economies, such as grains, Armenia is at a disadvantage.
In Armenia, IFAD works to improve incomes and living conditions of rural poor people. We concentrate on mountain areas, and particularly but not exclusively the needs of women and other disadvantaged people.
Farmers are increasingly interested in market opportunities. So IFAD has broadened its focus from food security, often providing small loans to help subsistence farmers produce a surplus for sale.
IFAD loans also support diversification of the non-farm rural economy. Our investments encourage poor people to start businesses, and in highland and border areas we target small- and medium-scale traders, processors, suppliers, and service providers who link and support farmers and markets.
Key activities include:
- increasing production and productivity where returns are highest, using private-sector development as the main engine for poverty reduction;
- supporting diversification of the non-farm rural economy;
- encouraging poor people to start small and medium-size enterprises;
- supporting government efforts to expand business opportunities for women in rural areas; and
- building and strengthening local institutions by making grassroots groups responsible for implementing and managing activities.
New IFAD investments in Armenia favour effective responses to rapid changes in the business, financial and agricultural sectors as the economy continues to recover.
In 2010, 36 per cent of Armenia’s 3.1 million people lived in rural areas, and one third in the capital city of Yerevan.
Agriculture generated around 20 per cent of GDP in 2012 and is the main livelihood for rural communities.
Farming employs more than 44 per cent of Armenia’s workforce overall and 65 per cent in rural areas.
Since 1995, IFAD has invested a total of US$89.5 million in seven projects and programmes in Armenia, benefiting 445,200 households.
Projects and Programmes
Equity investment in rural Armenia: A business model with a development impact
Armenia can boost income growth and youth employment through agriculture
Refinancing facilities: IFAD introduces an innovation in rural finance development
IFAD uses highly concessional loans in an innovative way in the Republic of Macedonia, the Republic of Armenia and the Republic of Moldova. Low-cost refinancing capital makes rural investments attractive and profitable for formal financial institutions and reduces rural poverty by stimulating economic growth.
In the past seven years, IFAD has successfully used refinancing facilities in economies in transition to stimulate investments on farms and in rural processing companies. The facilities have refinanced projects for a total value of over US$50 million in the Republic of Moldova, the Republic of Macedonia and the Republic of Armenia, with an excellent recovery performance. Refinancing operations have proved to be a viable alternative to established modes of financing rural investments through lines of credit and microfinance. And they have encouraged financial institutions to expand their rural networks and start investing in agro-projects from their own funds.