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The loan agreement between the Republic of Armenia and the French Development Agency, amounting to 100 million EUR, was signed on November 17, 2022 within the framework of the budget support program. It will be provided in two tranches. The budget support funds will be used to finance the deficit defined by the RA Law on the RA State Budget for 2022. So, the timely receipt of loan funds is of great importance from the point of view of financing the expenditures provided by the categories of the state budget.

The draft law on Ratifying the loan agreement No. CAM 1016 01 between the Republic of Armenia and the French Development Agency signed on November 17, 2022 was debated at the RA NA extraordinary sitting on December 9.

The RA Deputy Minister of Finance Vahe Hovhannisyan informed that the Government has the opportunity to choose whether the loan will be attracted with a fixed or floating interest rate. The fixed interest rate is 3.87%. The duration of the loan period is 20 years and the grace period is 5 years.

According to Vahe Hovhannisyan, the loan funds of the budget support program are aimed at such important reforms as capital investments and institutional reforms, which will contribute to the improvement of the future management system and financial markets, which, in turn, will contribute to the development of economic growth. The reforms provide that the Government should plan its expenditures based on strategic priorities.

Referring to the steps aimed at increasing the spending efficiency of the budget, the key rapporteur noted that a Budget Committee was formed. It will also discuss the shortfalls and causes of capital expenditures on a quarterly basis.

Speaking about the capital expenditure shortfalls, Vahe Hovhannisyan noted that according to the index of December 1 of this year, compared to the previous year, an improvement was registered in terms of percentage.

At the request of MP Tadevos Avetisyan, Vahe Hovhannisyan referred to the risks of floating interest rates. “We can fix any loan with a floating interest rate, it just incurs additional expenditures.”

Arusyak Julhakyan presented the endorsement of the NA Standing Committee on Financial-Credit and Budgetary Affairs related to the draft.

In his final speech, the RA Deputy Minister of Finance Vahe Hovhannisyan, referring to the RA public debt, noted that the public debt management is in a reliable and non-risky situation.

On December 9, at the extraordinary sitting, the Parliament adopted the draft law by voting.