Signed Projects as of December 31, 1999

International Commercial Black Sea Bank- Armenia
In December 1999, under an existing multi-project framework facility with the Commercial Bank of Greece, the EBRD signed a EUR I million equity participation in ICBSB Armenia, a start up commercial bank with full banking license.
Hrazdan Unit No 5
In April 1993, the EBRD approved a sovereign loan of EUR 55.6 million to complete construction of a new 30OMW gas-fired power station. The loan, in support of the Armenian government's strategy in the energy sector, aimed at helping to increase the country's power generating capacity, improve the efficiency of the electricity supply and reduce the environmental impact of the power sector. The loan was supported with technical assistance to help with regulatory reform of the energy sector, electricity tariff reform, installation of modem accounting systems in the Armenian electric utility, preparation of a medium-term plan for the power sector, and development of modem oil and gas contracting practices. A new financing plan is currently under consideration to complete the project and to privatize the unit as part of the government's overall privatization plan in the power sector.
Yerevan (Zvartnots) Air Cargo Terminal
In November 1994, the EBRD approved a loan of EUR 22.1 million to finance modem landing and loading facilities at Zvartnots Air Cargo Terminal. Zvartnots is the airport for Yerevan. The new facilities are vital in view of Armenia's transport limitations. As a landlocked country, it is dependent on unreliable and only partially available routes through its neighboring countries. The EBRD loan was used to construct buildings, apron and taxiways and to purchase equipment. Technical assistance was also provided to introduce professional and market-oriented management practices for the air cargo handling operation. Other objectives for the project included proper registration, control and monitoring of imports and exports, and the introduction of recognized procedures for the handling of civilian goods requiring special attention. Following the construction phase, the government will receive EBRD technical assistance to organize a tender to award a long-term operation contract for the terminal.
Wholesale market
In December 1995 the EBRD approved a loan of EUR 13.5 million for a dual purpose: first, to provide financing to the Armenia Wholesale Market Company (WMC) for the establishment of a modem wholesale market facility in Yerevan, with six related farmers' collection and assembly markets in rural areas; and, secondly, to provide a credit facility to be on-lent through a local bank to small private food marketing businesses. The new wholesale market facility was designed to support the development of a market-driven distribution system for fresh food. Before repayment, the project was re-examined by the government, however, and reduced to a much smaller scale.

Selected sources of financing for small and medium enterprises

In September 1999 the EBRD launched a Multi-Bank Framework Facility, designed to provide up to EUR 10 million in financial support to the best performing and best managed banks, and through them longer term funding to small and medium-sized enterprises (SMEs). The Facility will provide equity capital and credit lines for the country's top five or six banks, for on-lending to SMEs which lack access to short and medium-term borrowing. The banks will benefit not only from stronger economic status, but also from management know how transfer and strengthened corporate governance through an EBRD technical assistance program.
The Lincy Foundation, established by US Diaspora billionaire Kirk Kirkorian, is worth a total of US$ 100 million. It has already provided an initial US$ 10 million for loans to SMEs with a maximum non-resident stake of up to 20 per cent. The loans, of up to US$ I million, are administered through local Armenian banks, at an average annual interest rate of 15 per cent on local currency, for a maximum term of five years. The remaining US$ 90 million are to be further disbursed in US$ 10 million tranches. By the end of 1999, 24 projects had been presented to the Lincy Foundation for total credit of US$ 12.9 million, in sectors including hotels, food processing and automotive engineering. In February the next US$ 10 million tranche of SME credit was disbursed.
The Caucasus Fund was set up in 1998 by Caucasus Advisors of the US, which was jointly capitalized by Commonwealth Property Investors, an affiliate of AEGIS, and by Junction Investors. The Caucasus Fund is a private equity fund leveraged by the Overseas Private Investment Corporation (OPIC), which has invested US$ 8 million. In December 1999 the EBRD approved financing for a parallel fund, also worth US$ 8 million. Both funds will target investments primarily in private enterprises located or substantially operating in Georgia, Armenia and Azerbaijan, with the aim of achieving capital growth within the 10-year term of the funds. The Fund's priority spheres for investment include food processing, distribution, transportation, and property development.
Shorebank Advisory Services (SAS) is undertaking a five-year US$ 20 million Caucasus SME Finance Program funded by USAID. The primary focus of the program is to create and promote financial products and institutions that meet the needs of SMEs. Three participant banks have been identified.
The German Technical Cooperation Agency (GTZ) runs an SME support program to help develop legislation for SMEs and organizes business seminars. It is helping to draft laws on the state-run Agency for Support to Small and Medium-sized Businesses. Another initiative, the German-Armenian Fund (GAF), was set up in 1998 and is worth a total of DEM 14 million, funded by the German government and distributed by the Central Bank and other partner banks in the form of micro and small loans to businesses. The loans are made in Armenian drams rather than in US dollars. The GAF aims not only to develop SME activities but also to help strengthen the lending skills of local banks and widen the range of their services. About 140 loans were allocated in 1999 for a total of AMD 700 million. New loans are to be pro-vided to enterprises with 20 and more employees for a three-year period at monthly interest rates of 2-2.5 per cent. The GAF has opened three offices in the Armenian provinces and plans to extend its activities.
The World Bank's Enterprise Development Program included a US$ 9 million SME credit line. The Program started operating in November 1997, and is now fully disbursed. Under the Program, loans were made from the government to commercial banks, which on-lent to enterprises at annual rates of between 15-24 per cent. Loans ranged between US$ 20,000 and 400,000, with maturities from 1-5 years.