Dear Deputy Prime Minister, Dear Ministers, Your Excellences, Ladies and Gentlemen,
I am very pleased to be here on the occasion of the 30th anniversary of partnership between the Republic of Armenia and the World Bank.
The past three decades have witnessed Armenia emerge as a vibrant country eager to make its mark on the world stage and to ensure its people live healthy and prosperous lives.
Armenia, a country well-known for its scientific and technological achievements, was hard hit by the collapse of the Soviet Union.
In 1992, Armenia suffered from a severe shortage of foreign exchange, a collapse of industrial production, and sharply falling real wages, and the country faced a refugee crisis, not to mention hundreds of thousands of people made homeless by the devastating 1988 earthquake.
As Armenia came to terms with the economic challenges of its newfound independence, the country grappled with fundamental questions around institutions building, transitioning its economy, how to produce, and what to produce. And it needed to focus on all these challenges at the same time.
The people of Armenia and the government authorities took action. Determination, diligence, planning, and implementation of wide-ranging reforms, many of them supported by the World Bank, helped spur the country’s impressive economic growth. Armenia recovered from the initial shock of the early 1990s and was subsequently ranked for many years as a top performing country among all IDA recipient countries. IDA being our concessional window for the poorest countries in our membership.
This positive trajectory continued into the 2000s. Growth was driven by productivity gains in the private sector, as well as institutional reforms adopted to ensure the free formation of prices, liberal trade in goods and services, private ownership of assets, industrial restructuring, and a responsible fiscal and monetary policy.
In other words, first generation structural and institutional reforms laid the foundations for rapid growth.
By 2005, Armenia’s real GDP had reached 120% of its pre-transition level.
While Armenia experienced double-digit growth in the first half of the 2000s, a 2007 World Bank report, entitled The Caucasian Tiger, warned that continued growth would require advancing further on reforms. This second generation of reforms would need to include strengthening the framework for competition, achieving integration with international trade, and creating the conditions for the absorption of knowledge to lead to higher technological sophistication.
Unfortunately, the global financial crisis of 2008 made reform plans much more difficult. And over the coming decade, Armenia’s economic growth and poverty reduction efforts faced significant headwinds amid a range of tough external factors.
Despite the challenges, however, Armenia continued its transformation toward an open market economy and sustained successful investments in several sectors of the economy.
As a result, Armenia successfully graduated from IDA to IBRD as a recipient country in 2014, and within 5 years, reached Upper Middle-Income country status in 2019.
I would like to highlight two areas that witnessed significant progress in our partnership to date, and that we are proud to be part of.
The first relates to access to water. For several years following independence, the water supply and sanitation systems in Armenia were in a serious state of despair. Step by step, Armenia succeeded in reforming the water sector, including through the establishment of a successful public-private partnerships and well targeted lending by the World Bank. Combining public and private interventions, access to safe drinking water improved, both in terms of quantity and quality.
The second relates to electricity. Young people will not recall the severe electricity crisis of the 1990s. At that time, the electricity sector had become a heavy burden for the state budget and between 1992 and 1996 customers suffered through several of Armenia’s brutal winters with little more than two hours of electricity per day.
The World Bank helped with emergency investment credits to rehabilitate the infrastructure and provided policy lending for legal and regulatory modernization of the sector to pave the way for broad-based investments and improvements in service delivery. Today, investments in the energy sector are dominated by the private sector, and Armenia is on track to develop large scale renewable energy solutions to meet future energy needs.
These reforms were achieved thanks to the dedication of so many of our government counterparts, our own staff here and abroad, and the strong collaboration with many development partners.
The World Bank greatly appreciates the strong partnership with Armenia for the past 30 years and looks forward to many years ahead.
We will soon begin to discuss a new Country Partnership Framework to support the most important opportunities for Armenia to pursue a sustainable and inclusive growth path that continues to bring prosperity to the people of Armenia.
Recent years have been challenging globally and here in Armenia, and the global outlook is challenging and uncertain.
This evening we celebrate the many achievements over the past three decades, but it is also an opportune time for me to assure you that the World Bank stands ready today, as in the past, to bring all its resources and expertise to support Armenia.
We are here in the magnificent Mural Hall of the National Gallery, in which several pieces of Armenian medieval culture are exhibited.
I would like to end by quoting William Saroyan, an Armenian-American novelist, who wrote: “It is simply in the nature of Armenians to study, to learn, to question, to speculate, to discover, to invent, to revise, to restore, to preserve, to make, and to give.”
Thank you!
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Anna Bjerde is World Bank Vice President for Europe and Central Asia.
