The continuing economic crisis in Armenia will translate into a sizable increase in poverty already this year, a senior official from the World Bank said on Wednesday.
Owing to robust economic growth, the proportion of Armenians living below the official poverty line had steadily declined since the late 1990s when it exceeded 50 percent. The most recent government data, based on a nationwide survey of household incomes conducted in 2007, put the poverty rate at 22 percent.
According to Aristomene Varoudakis, head of the World Bank office in Yerevan, the bank now expects the figure to rise by 4 to 6 percentage points by next year. He said living standards in the country are certain to be affected by the ongoing contraction of the Armenian economy which made up 6.1 percent in the first quarter of this year.
“This contraction will have a serious social impact on the poor,” Varoudakis told a news conference. He said the Armenian government will therefore have to revise its new poverty reduction program and targets adopted last October. The government plans to set up a “working group” for that purpose soon, he added.
The medium-term Sustainable Development Program committed the government to cutting the poverty rate by more than half in the next four years and bringing it down to only 7 percent in 2021. It also called for a doubling of Armenia’s Gross Domestic Product per capita by 2015.
Varoudakis praised the government for not cutting back on social spending projected by its 2009 budget despite a major shortfall in tax revenues, another consequence of the economic crisis. He revealed in that regard that the World Bank will likely disburse in early July a major loan designed to finance Armenia’s widening budget deficit. Varoudakis declined to specify the size of the loan, saying that negotiations between the bank and Yerevan are still going on.
Citing the tax shortfall, the government said last March that it has delayed 131 billion drams ($360 million) in planned budgetary expenditures until the fourth quarter of this year. The sum is equivalent to almost 14 percent of its full-year spending target.
The World Bank already approved in February $85 million in loans aimed at mitigating the global economic downturn’s impact on Armenia. The largest of those loans, worth $50 million, will be provided to several Armenian commercial banks that will in turn lend the funds to local small and medium-sized businesses. Another $25 million will be spent on the construction of rural roads and other infrastructure.
In addition, the bank’s Board of Directors approved on Tuesday a $25 million loan designed to support more government reforms of Armenia’s system of pre-school, secondary and higher education. The money is to be spent over the next five years on a wide range of activities, including purchase of laboratory equipment for all Armenian schools. A World Bank statement said about 400 of those schools located in remote areas will be computerized and connected to the Internet.
According to Aristomene Varoudakis, head of the World Bank office in Yerevan, the bank now expects the figure to rise by 4 to 6 percentage points by next year. He said living standards in the country are certain to be affected by the ongoing contraction of the Armenian economy which made up 6.1 percent in the first quarter of this year.
“This contraction will have a serious social impact on the poor,” Varoudakis told a news conference. He said the Armenian government will therefore have to revise its new poverty reduction program and targets adopted last October. The government plans to set up a “working group” for that purpose soon, he added.
The medium-term Sustainable Development Program committed the government to cutting the poverty rate by more than half in the next four years and bringing it down to only 7 percent in 2021. It also called for a doubling of Armenia’s Gross Domestic Product per capita by 2015.
Varoudakis praised the government for not cutting back on social spending projected by its 2009 budget despite a major shortfall in tax revenues, another consequence of the economic crisis. He revealed in that regard that the World Bank will likely disburse in early July a major loan designed to finance Armenia’s widening budget deficit. Varoudakis declined to specify the size of the loan, saying that negotiations between the bank and Yerevan are still going on.
Citing the tax shortfall, the government said last March that it has delayed 131 billion drams ($360 million) in planned budgetary expenditures until the fourth quarter of this year. The sum is equivalent to almost 14 percent of its full-year spending target.
The World Bank already approved in February $85 million in loans aimed at mitigating the global economic downturn’s impact on Armenia. The largest of those loans, worth $50 million, will be provided to several Armenian commercial banks that will in turn lend the funds to local small and medium-sized businesses. Another $25 million will be spent on the construction of rural roads and other infrastructure.
In addition, the bank’s Board of Directors approved on Tuesday a $25 million loan designed to support more government reforms of Armenia’s system of pre-school, secondary and higher education. The money is to be spent over the next five years on a wide range of activities, including purchase of laboratory equipment for all Armenian schools. A World Bank statement said about 400 of those schools located in remote areas will be computerized and connected to the Internet.