EUR 26.5 million loan from the World Bank for public sector modernization projects in Armenia

The Board of Directors of the World Bank today approved a loan of EUR 26.5 million for the fourth Public Sector Modernization Project (PSMP IV) for Armenia. The project is the fourth in a series of public sector modernization projects in Armenia and will help the government improve efficiency and access to selected government services for businesses and citizens.

Access to many public services in Armenia still requires the physical presence of citizens. It is especially in rural areas that this manifests itself. Citizens also have difficulty accessing already existing digital services. A World Bank ICT survey found that only 5% of Armenian citizens and businesses currently use government services online.

The Armenian government has prioritized the digital economy as a key pillar for economic growth and GovTech. The project recognizes that a whole-of-government approach is needed for digital transformation to promote simple, efficient and transparent government systems and public services. The digitization strategy for 2021-2025 lays the foundation for the development and implementation of this approach.

“Modernizing public administration and efficient delivery of public services can foster inclusive growth and reduce inequality,” said Carolin Geginat, World Bank Country Manager for Armenia. “Streamlined and digitized business processes promote resource efficiency and improve the productivity of public services. A more efficient public sector, able to deliver efficient and accessible services, also provides greater equality of opportunity for citizens and supports productivity of the private sector.”

The project will support the government’s approach to modernizing the public sector, through three components anchored in public administration, data management and digital service delivery systems. The first component focuses on the overall efficiency of the public administration and supports the improvement of the productivity of the Civil Service Office, the civil service administration, the Ministry of Justice.

The second component supports digital public service delivery, with a focus on modernizing tax and customs administration systems to improve the efficiency of revenue mobilization and strengthening government service delivery. Supporting local governments, through piloting activities related to the re-engineering of databases, data infrastructures and IT systems, will align them with the business processes of central government agencies.

And the third stream supports the underlying technology foundations needed for successful project implementation, improving and strengthening data governance/management, cloud computing, cybersecurity, and artificial intelligence.

The proposed project builds on the achievements of the three previous operations supported by the Bank and focused on modernizing public sector functions and services in Armenia, with the application of technology for more efficient and accessible services.

The World Bank will provide an IBRD loan of 26.5 million euros (equivalent to $29.9 million) at variable spread, with a grace period of 14.5 years and a total repayment term of 25 years . The government’s contribution is 5.3 million euros (equivalent to 6 million dollars). Since joining the World Bank in 1992 and IDA in 1993, commitments to Armenia have amounted to approximately $2,477,870 million.

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