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	USAID Information: USAID Country Page More Stories from Armenia FY 2009 Congressional Budget Justification (PDF) Mission Web Site Selected Reports from the USAID Document Database External Links: U.S. State Department Background Notes CIA World Factbook United Nations Development Programme World Bank Group
	Statement of the Administrator Summary of FY 2006 Budget Request Program Highlights Management Improvements USAID Support Budget Operating Expenses Capital Investment Fund Working Capital Fund Operating Expenses, Inspector General Foreign Service Retirement and Disability Fund International Disaster and Famine Assistance Transition Initiatives
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Armenia

The CBJ Profile Program Summary Tables Complete USAID/Armenia Program Please note: All linked documents are in PDF format Objective SO Number FY 2004 FY 2005 FY 2006 Increased Employment 111-0130 15,000 14,000 10,000 Energy and Water Sectors Reform 111-0150 10,430 8,300 6,000 Democracy and Governance 111-0210 7,425 7,500 6,000 Primary Health Care 111-0320 6,251 5,170 4,000 Social Protection 111-0340 8,646 7,400 5,500 Cross-Cutting Programs 111-0420 6,381 6,985 4,560 Transfers   20,425 25,045 18,940 Total (in thousands of dollars) 74,558 74,400 55,000 Excludes P.L. 480. See Program Annex.

The Development Challenge: In the 1990s, USAID shifted increasingly from providing humanitarian assistance to development assistance in response to the Government of Armenia's reform initiatives. USAID now concentrates its efforts on helping Armenians achieve a stable, open democracy and a law-based market economy.

Despite steady macroeconomic progress reflected in consistently high growth and low inflation rates, Armenia's poverty rate remains very high. At the end of 2003, 42.9% of Armenians lived below the poverty line, spending less than $24 a month. Government data show an increase of 10.3% percent in gross domestic product (GDP) for the first nine months of 2004. Much of the growth rate in 2004 was due to high donor financing, while growing exports and deepening import substitution account for the remainder. The exchange rate has seen a steep increase in the value of the dram versus the dollar, partly due to a high level of remittances. Exports grew by 1.5% in the first nine months of the year, while imports rose by 3.9% in the same period. Nevertheless, export levels remain very low, at $332 million in 2003 excluding diamond exports, which contribute little to the total economy. Imports are twice the value of exports and are made possible by remittances, which according to a USAID study amounted to about $900 million in 2003, or nearly one-third of GDP. This extremely high level of remittances as a percentage of GDP also indicates a high number of Armenians working abroad, likely due to the lack of well-paying domestic jobs. A low level of exports and dependence on outside financing suggests that the Armenian economy is not yet sustainable.

Armenia remains politically and economically isolated due to the ongoing the Nagorno-Karabakh (NK) conflict. Borders with neighboring Turkey and Azerbaijan remain closed. Closed borders have a negative impact on Armenia's economy and its prospects for growth, even though highway and rail traffic continues across the border with Georgia to the north and lighter highway traffic continues with Iran to the south. Some trade continues with Turkey through Georgia. Successful resolution of the NK dispute would allow the reopening of trade routes, making Armenia more attractive to potential investors.

The Government of Armenia's achievements toward strengthening democracy have been overshadowed recently by a number of incidents of violence against journalists and by the harsh crackdown on demonstrators in April 2004, when peaceful demonstrations held throughout the country and in Yerevan culminated in the forcible dispersal of demonstrators in front of the Parliament. Executive dominance of the political system continued to pose a significant challenge to Armenia's transition to democracy, resulting in reduced political and economic competition and providing little recourse for citizens to challenge the use of public office for personal gain. Various international organizations, including the OSCE, criticized the actions of authorities against the demonstrators in April 2004 and the overly lenient handling of the perpetrators of the attacks on journalists.

An overall lack of transparency and accountability, along with the country's relatively weak economy, has created an environment in which corruption can flourish. Entrenched state and business interests have little will or incentive to change the status quo. Corruption in Armenia includes bribery, illegitimate acquisition of assets, clientelism, as well as political corruption and conflicts of interest in the judicial and law enforcement sectors. The dominance of the Executive branch of government has reduced competition in Armenia's political and economic spheres. As a result, rule of law is problematic, political parties are weak and the media are not truly independent. Combating corruption is key to advancing Armenia's economic, political, and social reform process.

The USAID Program: USAID works in five strategic areas: economic reform, energy/water, democracy, health, and social sector reform. In these areas, five strategic objectives concentrate on: creating a more widely shared economic base; continuing democratic progress through increased political pluralism and the participation of civil society; improving the health and welfare of the population; protecting those still in vulnerable social conditions; and improving Armenia's access to energy and water resources. Also in FY 2005, the housing certificate program in the Earthquake Zone will come to an end. The first phase of USAID support to a reformed social protection system will be completed. USAID will begin to transition its work on capital markets to Armenian organizations.

Other Program Elements: Through its farmer-to-farmer program, the office of Economic Growth, Agriculture, and Trade (EGAT/AG) funds short-term, U.S. volunteer technical assistance to increase farm and agribusiness productivity and incomes.

Other Donors: Other multilateral donors include the World Bank, European Union (energy, legal reform, governance, higher education, vocational education, agriculture, social protection, and information technology), the International Monetary Fund (macroeconomic policy), the United Nations network of agencies, e.g. UNDP (poverty reduction, democracy and governance, post-crisis management, HIV/AIDS, energy & environment, and information technology), UNHCR (refugee support), UNICEF (health, education, and social sector), World Food Program, World Health Organization, and the OSCE (anticorruption and elections). USAID also coordinates its activities with private donors active in Armenia, in areas as diverse as civil society, education, public health, media, private enterprise development, and judicial reform. Most donors participate in formal monthly donor meetings, co-chaired by the World Bank, UNDP, and USAID.

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