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Armenia: Armenians Seek To Attract Investment

Washington, 14 January 1997 (RFE/RL) - Armenia's Prime Minister Armen Sarkissian and his senior economic ministers made it clear to World Bank officials in Washington Monday that the new government is ready to do what is necessary to attract foreign investment to Armenia.

Sarkissian spent a major part of the day with various World Bank officials, from a short get-acquainted session with President James Wolfensohn to lunch with bank Vice President for Europe and Central Asia, Johannes Linn, to a series of meetings with the private sector specialists at the bank's International Finance Corporation (IFC).

Just last month, the bank approved a loan of around $16.75 million to Armenia to help the country implement an enterprise development project, including an $11 million line of credit being made available through local banks to finance specific development projects to enterprises engaged in manufacturing, agro-business, commercial services, mining and energy, among others.

The bank says the government of Armenia has embarked on "an ambitious economic recovery program," one of the key elements of which is to bring investment into the country's private economic sector. The bank says Armenia's current low rate of investment is due to the collapse in domestic production and demand since the break-up of the former Soviet Union, aggravated by external trade disruptions.

Bank and other officials who have dealt with Armenia say that Sarkissian's elevation to Prime Minister two months ago made a big change in the government's attitude toward private development and investment.

An official of the IFC, speaking on the condition of not being named, told our economic correspondent that Sarkissian is definitely more reform minded and he is the reason for a new optimism" among international financial experts that 1997 may see a real turn around for Armenia.

The official adds, however, that Armenia remains "a land-locked country with blockades by Turkey and Azerbaijan," which will always prevent full foreign investment.

The IFC attempted to put together an agro-business processing plant project in Armenia last year, the official said, but it still has not come to fruition because all of the needed investors couldn't be brought on line. "No foreign commercial banks are ready to take the Armenia risk," commented the official. Although he says World Bank and other officials "think the country has some very reform minded officials, we think the people are very entrepreneurial and they definitely have potential."

Other IFC officials say the agency, which specializes in providing credits and direct investment to private industry projects, is in the "early stages of considering a small project in the power sector and is also interested in working with a strong local bank to extend a credit line for on-lending to small and medium enterprises."

The officials add, however, that "none of these are in the advanced stages."

These were among the things being discussed by the Armenian delegation in Washington. One official commented that the Armenians "don't hide the fact that what they want is not so much privatization help (or other technical training), but they want investment."

Today (Tuesday), Sarkissian and his economic ministers will be holding meetings at the International Monetary Fund (IMF). The fund last March approved a three-year extended loan to Armenia for about $148 million to support the government's economic reforms.

In addition to working level meetings by the ministers, Sarkissian will have lunch with IMF Managing Director Michel Camdessus.