Armef News informs that on the 3rd of September the Minister of Finance of Armenia, Mr. Gagik Khachatryan, and the OFID Director General, Mr. Suleiman Jasir Al-Herbish, signed the Loan Agreement at the amount of 25 million USD for the Infrastructure and Rural Finance Support Program in Armenia (IRFSP). 

 

The Government of Armenia approved the said Agreement at the October 29th session in accordance with internal procedures. 

 

The main target of the program is reduction of rural poverty in Armenia through the following operations: 

 

•     increase smallholder farming efficiency, promote post-production activities and cash crops cultivation; 

 

•     strengthen the links among the processing companies and poor rural smallholders making the access to domestic and export markets feasible and creating more opportunities for jobs within the value chain; 

 

•     make the agro production systems more resilient to rainfall and other climatic conditions; 

 

•     support food safety and quality of marketable produce for betterment of health conditions of people by enhancing water supply to rural households.

 

 

The program components are described below.

 

 

 

 The Rural Finance Component is financed completely by IFAD. The objective of the Component is to stimulate sustained growth of rural economic activity through improved and expanded access to appropriate financial services by rural small-scale producers and SMEs. The Component will utilize new financial instruments to complement the grant financing for technical support. The following will be achieved by implementing Support of Refinancing of RFF Operations and Support to Investment Operations of FREDA sub-components: 

 

Funds will be provided to the Participating Financial Institutions through RFF refinancing operations, which will extend credits to rural smallholders and SMEs to increase the level of their operations and revenues.

 
Through investments and allocation of funds, as well as providing various managerial and technical support, FREDA will uphold small and medium private companies having strong links with poor rural producers within the agriculture value chain.  

 

The Rural Infrastructure Component is implemented with financing of OFID and Government of Armenia.

 

The goal is to enhance the water supply and irrigation systems of rural communities in 7 marzes of Armenia, namely Shirak, Lori, Tavush, Gegharkunik, Vayots Dzor, Syunik and Aragatsotn, focusing on areas of high incidence of poverty. The sub-components are:

 

 

 

 

         1. Community Water Supply

The objective is to ensure that sufficient water is provided for safe drinking, watering of animals and growing staple food on backyards. 
  

        2. Small and Medium Scale Irrigation Distribution

Construction and/or rehabilitation of tertiary systems for increased efficiency of water distribution will be undertaken. In addition, existing layouts will be upgraded to adjust them to small privatized plot purposes.

 

 

The Farmer Awareness and Support Component is financed solely with IFAD funds.

Within this component technical support and training will be extended to the farmers in the following areas: a) social and agricultural assessment; b) farmer awareness and empowerment; c) consultancy services and training on marketing, agro-processing and best agricultural practices, and d) business and finance planning. In addition, small scale grants will be provided to women for undertaking demo projects targeted at diverse family food production. 

 

Program Management Component is targeted at daily management and coordination of the Programs in progress. The overall responsibility for the Program management and implementation is vested in the Steering Committee reporting to the Prime Minister of Armenia.  

 

It should further be noted that the loan duration is 20 years, 5 of which on concessional terms, with annual 2.75% interest rate.