Supporting th

e Country to

Turn Challe

nges into

Opportunitie

s

Better connectivity, better livelihoods…

Out of each 6 communities 1 has benefitted from the rehabilitated roads

 

Easily Accessible Precious Commodity…

For each hour of water Yerevan residents now get 2 extra hours of high quality water

 

The World of Knowledge is a Click Away…

Half of the teaching force is actively using multimedia technologies in the classroom

 

Empowering the Communities…

1 out of each 4 persons benefitted from temporary employment under ASIF managed projects has later on transferred to a permanent job

 

 

Some of the Key Results of Our Engagement

Security in Old Age…

All pensioners receive their pensions in a well-timed manner

 

Yielding the Entrepreneurial Spirit….

2 out of each 3 beneficiary SMEs have expanded their volume of production and services during the global crisis

 

Upgraded Courts, Superior Justice…

2 out of each 3 courts in the country have been rehabilitated

 

Less Paper, more Results…

Instead of 1 or 3 business days now it takes 40 minutes to circulate documents among various state bodies

Some of the Key Results of Our Engagement

*Recent Economic Developments

Remarkable Growth Followed by a Severe Downturn

The crisis revealed weaknesses in the growth model.

• Armenian economy grew by about 12%

• Construction became the dominant sector

• The high level of informality (40% of the sector's turnover and two-thirds of employment)

• The share of manufacturing declined from 17% to 9% of GDP

• The fiscal deficit jumped from less than 2 percent of GDP to 7.6%

The Government’s strong counter-cyclical fiscal policy focused mainly on increased spending on infrastructure, social protection, and emergency financing for enterprises.

-60.0

-50.0

-40.0

-30.0

-20.0

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0.0

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20.0

30.0

40.0

2008

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2008

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2008

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2008

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2009

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2009

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2009

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2009

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2010

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2010

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2011

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2012

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GDP Agriculture Industry Services

Sources: NSS data and Bank staff calculations.

Figure 3. Real GDP and its Components(year-on-year change in percent)

*Signs of Recovery

Inflation dynamics followed developments in agricultural production

• Agriculture contracted by 16.2 % in real terms in 2010

• Inflation soared to double-digits in early 2011

• Recovery of agriculture brought prices down

• Inflation returned to the Central Bank’s target of 4%

Strong growth of exports contributed to improving external balances

• Average growth rate of merchandise exports was 37%

• High growth of exports narrowed trade deficit from 24.% to 20.5 % of GDP

• After shrinking by 30% remittances rebound to 10% above the 2009’s level

• Remittances eased pressures on current account

• Current account deficit reduced to 10.7 % of GDP

*Fiscal Consolidation

• Crisis response policies substantially expanded the fiscal deficit from 0.4% of GDP in 2008 to 7.6% of GDP in 2009

• In 2011 public-debt-to-GDP ratio peaked at approximately 42 percent, up from 16.4 percent at the end of 2008

• Lending from multilateral and bilateral donors remained the key source of deficit financing

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2008 2009 2010 2011 2012

Revenue and grants Tax revenue Expenditures Overall balance

Key Fiscal Indicators, 2008-2012(percent of GDP)

Source: MOF, NSS and Bank staff calculations

*Some Changes Needed

Progress notwithstanding, the economy grew primarily on the basis of its transition catch-up premium and the development of non-tradable sectors

• Over the past decade, the tradable sectors either stagnated or shrank.

• The exceptions were tourism and, more recently, the mining and information and communication technology (ICT) sectors.

• Armenia’s labor market experienced little transformation during this process.

Armenia has yet to experience a significant transformation of its economic structure

• Manufacturing and services have yet to absorb the excess labor in rural areas, and agricultural productivity is still too weak to increase significantly.

• In the labor market, a tremendous amount of mobility needs to take place to move workers from low-pay and low-productivity jobs to high-pay and high-productivity ones.

 

*Poverty, Inequality and Gender

*Poverty Incidence, 2008–11 (%)

Source: “Social Snapshot and Poverty in Armenia”, 2012, National Statistical Service (NSS).

Inequality as measured by the Gini coefficient increased on the basis of both consumption (from 0.24 to 0.27) and income aggregates (from 0.34 to 0.37).

*Key Factors Linked to Poverty

Employment. Employment plays a key role in determining the

poverty status.

Poverty incidence with no employed members was

41%––21% higher

Women earn on average 40 percent less than men

Education. Poverty incidence is the lowest

among those with tertiary education:

Approximately 16% points lower

Households headed by individuals holding

university degrees on average had consumption

levels 24%

Demographics. The demographics of the household, both in

gender and composition, affects poverty

incidence:

Female-headed households are more likely to be poor

(34.3% vs. 35.2%);Households with several young children are more

likely to be poor

Household location and migration. Location also correlates to household

welfare:

Households with members who had emigrated demonstrated 18-23

percent higher consumption

DPO Indicative Reform Areas

A development policy operation (DPO) series will help the government to plan its financing needs and establish a framework for cross-sectoral policy reform dialogue, complemented by knowledge products and TA operations

Strengthening Competitiveness

1. Improve the business environmentEnhance competition2. Promote industrial development and exports3. Develop the financial sector4. Enhance the sustainability of key infrastructure

Enhancing Social and Environmental Sustainability

1. Strengthen social protection systems, especially coverage and targeting2. Roll-out the integrated social services centers across the country3. Mainstream environmental sustainability in the mining sector

Improving Efficiency of Public Administration

1. Fight corruption and conflict of interest in public sector2. Mobilize tax revenue3. Reform the civil service4. Promote e-governance

*Job CreationTIME FOR

Growth

JobCreation

Poverty Reduction

Opportunities

For All

TransfersTaxes

Social Contract

Private Sector and the state

*Pathways for shared prosperity

*ADS and CPS Alignment

Supporting Competitiveness and Job Creation

 The World Bank intends to support private sector-led job creation through the four outcome areas

Improve the business environment and

investment climateSupport to improve the environment for SME

development -appropriate macroeconomic

policy-flexible exchange rate

policy -business climate reform-export and investment

promotion-corporate financial

information and access to finance

Increase agricultural production in a sustainable way1. Support the

development of agriculture and rural development with

better value chain and market integration

2. Through enhanced infrastructure support

sustainable development of the

agricultural and rural economy

3. Support competitive businesses along the

agriculture supply chain

Upgrade key economic

infrastructure services

1. Accessibility of quality economic

infrastructures, notably transport, energy, water

and sanitation2. Support reforms

aimed at addressing regulatory weaknesses

in air transport to improve air connectivity Maintain macroeconomic

stability

Improving Efficiency and Equity in Social Services

Improved maternal and child health, NCD management, and hospital efficiency, accountability and quality• develop primary healthcare, improve health financing, optimize and

modernize public hospitals• assist in better targeting limited health budget to the poor Improved general education quality and labor market linkages of higher education• improve school readiness of children entering primary education • improve the learning environment in general education, including integration

of ICT into teaching and learning processes and enriching education in high schools

• increase partnerships between higher education institutions and the private sector established under the Competitive Innovation Fund

 Improved coverage and targeting of the FBP and efficiency of social services delivery• assist in identifying options for further updates to the FBP’s eligibility formula• support the integrated delivery of social services through one-stop-shops Improved disaster risk mitigation and adaptation• support the development of catastrophe risk financing and weather risk

hedging instruments

* Improved anti-corruption framework in public services

• promote improved access to information on Government activities, notably through the ongoing electronic procurement program which would allow disclosure of procurement outcomes, effective contract management to ensure compliance with deliverables, and public reporting to enhance accountability over results

• strengthen the core anti-corruption bodies, including the Anti-Corruption Council, Anti-Corruption Strategy Implementation Monitoring Commission, and Ethics Commission for High-Ranked Officials. Additional efforts should concern, notably, the Chamber of Control (CoC)

• roll-out legal and judicial reforms to capture demand-side institutions, including advocacy and pre-court investigative functions and documentation

• design and implement a capacity development and anticorruption training and awareness program for employees across all levels of the civil service

• strengthen the CoC’s auditing capacity and professionalism

Access to Information Policy*: http://www.worldbank.org/wbaccess Documents and Reports: http://www.worldbank.org/documents

Mapping for Results: http://maps.worldbank.org\

Open Data: http://data.worldbank.org

Open Knowledge Repository: http://openknowledge.worldbank.org

Projects & Operations: http://www.worldbank.org/projects

World Bank Finances: http://finances.worldbank.org

World Bank Project Cycle: http://www.worldbank.org/projectcycle

*Useful links

* Any information in the World Bank’s possession that is not on the list of 10 exceptions is available to the public.