Armenia’s Roadmap to Economic Growth: Recommendations for Private Finance, Financial Inclusion, and Public-Private Partnerships
Yerevan - A new report by a leading development finance institution has outlined a comprehensive plan to boost Armenia’s economic growth through private finance, financial inclusion, and public-private partnerships. The Development Finance Assessment (DFA) identifies key areas of improvement and provides recommendations for policymakers to unlock the country’s vast potential.
Private Finance: A Key Driver of Growth
Measuring Alignment with SDGs and National Priorities
The DFA highlights the importance of developing systems to measure the alignment of private investment with the Sustainable Development Goals (SDGs) and national priorities. Armenia must also assess opportunities for attracting SDG-oriented investments, implementing results from the SDG Investor Map.
Attracting Foreign Direct Investment
A long-term strategy is needed to develop foreign direct investment in high-potential areas, while a short-term “FDI revolution” plan can help change the direction of this flow by modernizing legal and regulatory frameworks.
Financial Inclusion: Empowering MSMEs
Reducing Credit Risks and User Costs
To promote financial inclusion, Armenia should implement policies to reduce credit risks and user costs, improve alignment with SDGs and national priorities, and develop a medium-term plan for national financial markets.
Supporting SME Sector Development
A Financial Inclusion Strategy is also needed to support the implementation of the 2020-2024 SME Sector Development Strategy.
Public-Private Partnerships: Unlocking Infrastructure Development
Consolidating Market Transition and Enabling Environment
The DFA identifies opportunities for public-private partnerships (PPPs) in infrastructure development, recommending the consolidation of the market transition and the enabling environment for private sector development. This includes addressing short-term legal and regulatory reforms, financing investments to remove infrastructure constraints, and improving access and quality of domestic financing.
Innovative Finance Mechanisms: Attracting Impact Investments
Developing Blended Finance Policy
To attract impact investments, Armenia should develop a blended finance policy to leverage private commercial capital for strategic goals. The country must also develop “ecosystems” of policies to attract innovative approaches for CSO investment and co-finance priority projects with the nonprofit sector.
Implementation Plan: A Roadmap to Success
The DFA provides an implementation plan, summarized in the table below, which outlines key recommendations for policymakers to improve private finance, financial inclusion, public-private partnerships, and innovative finance mechanisms. The plan emphasizes the importance of a systemic approach that integrates opportunities in the public and private spaces.
Summary of Recommendations:
| Area | Recommendation |
|---|---|
| Private Finance | Develop systems to measure alignment with SDGs and national priorities |
| Financial Inclusion | Implement policies to reduce credit risks and user costs |
| Public-Private Partnerships | Consolidate market transition and enabling environment for private sector development |
| Innovative Finance Mechanisms | Develop blended finance policy to leverage private commercial capital |
By implementing these recommendations, Armenia can unlock its vast potential for economic growth and development, paving the way for a brighter future.