Armenia’s Political Freedom Came in 1991, and Economic Freedom Followed
Since establishing its independence from the Soviet Union in 1991, Armenia has pursued socioeconomic reforms, transitioning from a centrally planned economy to a sophisticated market economy. As a result, it has made considerable progress fighting poverty, and improving governance and social services. Promoting utility regulation, expanding financial intermediation, and cultivating the investment climate have sharpened the country’s competitiveness, helping it face the most recent challenge—minimizing the effects of the global financial crisis.
Building the Economy, Credit by Credit
Since the mid-1990s, IDA has financed a series of five structural adjustment credits, four poverty-reduction support credits, and a recent development policy credit to help build Armenia’s market economy. IDA has focused on improving governance in the financial sector, enhancing business competitiveness, stimulating farm incomes, and decentralizing education and health services. Most recently, IDA has helped design and finance a strong counter-cyclical response to the global economic crisis.
- Provided US$86.5 million in a series of four poverty-reduction credits.
- Mitigated the effects of the global financial crisis. With the retraction in international trade and capital flows, IDA’s counter-cyclical response featured emergency job creation, credits for rural roads and irrigation, and expanded credit for small and medium businesses. Current policies aim to sharpen Armenia’s competitiveness, bolstering the foundations for renewed growth.
- Improved the macroeconomy. Growth was supported by low fiscal deficits, while plunging external debt and inflation remained low. This created the fiscal and debt space for a pronounced counter-cyclical boost when the need arose in 2009.
By the Numbers
- >10%annual average growth rate over the past decade.
- <25% of the population lives below the poverty line—compared to more than half the population a decade ago.
- >15% increase annually in education, health, and social spending.
- 58% expansion in GDP from 2004-08.