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Description |
ADB extends debt facilities totaling up to $65 million to Armenian banks for on-lending to SMEs. ACBA Credit Agricole, Ameriabank, Ardshininvestbank, and Inecobank were selected to be the banks to participate in the program based on their credit profiles, their willingness and ability to expand their SME portfolios, and ADB's potential to add value under and beyond the program. |
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Objectives and Scope |
The program increases the capacity of local banks to provide SMEs with longer-term financing to support SME growth and productivity. Supporting the growth of SMEs will increase the contributions made by SMEs to GDP, labor, and key economic sectors. SMEs are drivers of economic growth, private sector development, and economic diversification. They comprise a substantial proportion of private sector activities, particularly outside Yerevan where poverty rates are higher, and can be a source of building competitiveness. The promotion of SMEs leads to higher income levels for SME owners and employees, and aids in job creation, which facilitates poverty reduction and broad-based growth. |
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Linkage to Country/Regional Strategy |
Strategy 2020 identifies private sector development as one of the five drivers of change to alleviate poverty in the region. Financial sector development is noted as one of the five core specializations that will be undertaken in support of this agenda. The Armenian government's broad macroeconomic objectives repeatedly emphasize private sector operations as essential to Armenia''s growth. ADB''s Economic Report and Interim Operational Strategy, 2006 -2009 for Armenia cites that an underdeveloped finance sector, including lack of access to long-term financing, is a major bottleneck to private sector development. The Financial Sector Operational Plan calls for enhanced focus on the traditionally underserved (including SMEs) to achieve inclusive growth, one of the three strategic agendas of Strategy 2020. Finally, PSCM's Business Plan and Priorities, 2010 -2012, directs PSCM to assist private banks with loans, equity, and TA to encourage and support market participants at the forefront.
The SME Finance Program supports both private and financial sector development, as directed by ADB's country and sector strategies, by increasing the capacity and ability of Armenian banks to expand lending to urban and non-urban SMEs, which comprise an important and underserved portion of Armenia''s economy.
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