The Asian Development Bank (ADB) is extending $200 million in loans and grants to help Armenia, Georgia and Tajikistan sustain critical social spending programs that have been imperiled by the global economic crisis, the bank’s press office said.
ADB’s Board of Directors has approved two program loans of $80 million equivalent for Armenia; two program loans of $80 million equivalent for Georgia; and a program grant of $40 million for Tajikistan. All the funds will come from ADB’s Asian Development Fund, a financing facility that offers loans at low interest rates and grants to reduce poverty in its poorest developing member countries. The loans are expected to be fully used by the end of this year.
The three economies have been among the worst hit in the region by the crisis. Armenia and Tajikistan have seen a huge influx of returning workers who have lost their jobs in the Russian Federation and Kazakhstan, resulting in a sharp decline in remittance income, private domestic spending, and government revenue. In Armenia, real gross domestic product (GDP) is forecast to contract by 9.5% in 2009. Tajikistan’s real GDP growth for 2009 is expected to be zero, down from 8% in 2008. In Georgia, a loss of investor confidence and a slump in foreign direct investment, sparked by the conflict of August 2008, have been exacerbated by the crisis, resulting in falling growth and a decline in employment. Real GDP growth in 2009 is forecast to be negative 1.5%.
ADB’s funding support will allow the governments to deal with negative shocks to budget revenue and maintain core spending programs for critical social needs such as welfare payments and social services for vulnerable groups. It will also allow them to push through with public investments designed to preserve and create new jobs for economic recovery. The funds complement assistance from other multilateral agencies and bilateral sources, including the International Monetary Fund, World Bank and European Union, and are aligned with the crisis mitigation programs of the three countries.
“ADB’s programs, in tandem with the initiatives of other development partners, will support essential public spending to protect the poor and vulnerable, as well as aid in the revival of the economies of the three countries,” said Xiaoyu Zhao, Vice President of ADB’s operations in the region.
Armenia and Georgia joined ADB in 2005 and 2007 respectively, while Tajikistan has been a member since 1998. To date, ADB has extended assistance amounting to a total of $83 million, $110 million and $381 million to Armenia, Georgia and Tajikistan respectively.