December 19, 2005
For Immediate Release
Contact: Elizabeth S. Chouldjian
tel: (202) 775-1918

ANCA WELCOMES APPROVAL OF $236 MILLION MILLENNIUM CHALLENGE ACCOUNT COMPACT WITH ARMENIA

Funds to Target Reducing Rural Poverty

WASHINGTON, DC – The Armenian National Committee of America (ANCA) today welcomed the announcement by the Millennium Challenge Corporation (MCC) of a five-year, $235.65 million dollar grant to help reduce rural poverty in Armenia.

“On behalf of all Armenian Americans, we welcome today’s news that our government will be investing nearly a quarter of a billion dollars over the next five years in reducing rural poverty in Armenia,” said ANCA Chairman Ken Hachikian. “This important milestone in the growing partnership between the U.S. and Armenian governments reflects the shared values, enduring ties, and unshakable friendship between the American and Armenian peoples.”

The agreement between the Armenian government and the MCC is designed to accomplish one goal – reducing rural poverty through a sustainable increase in the economic performance of the agricultural sector. In a press release issued earlier today, the MCC explained that “the compact consists of two investments: a Rural Road Rehabilitation Project and an Irrigated Agriculture Project. The program will directly impact 75% of the rural population and is expected to increase annual incomes by $36 million in 2010 and over $113 million in 2015.”

Commenting on the grant, MCC Chief Executive Officer, Ambassador John Danilovich, offered “congratulations to the people and Government of Armenia for this great achievement. They have developed an integrated, results-oriented program that will provide rural residents better access to jobs, social services, and markets and increase the productivity of farmers.” In a letter to the President of Armenia, Robert Kocharyan, Danilovich stressed the U.S. commitment to the people of Armenia and praised the work of Armenia’s MCC management team, but also expressed concern regarding shortcomings in the recent constitutional referendum and, more broadly, Armenia’s adherence to the MCC eligibility criteria of “ruling justly.”

Launched by President Bush, the MCA is a different approach to development assistance that recognizes sound policies and good governance are critical to poverty reduction and economic growth in developing countries. Since its establishment last year, MCC has signed Compacts totaling more than $900 million with five nations – Madagascar, Honduras, Cape Verde, Nicaragua, and Georgia. MCC is also actively engaging with other MCA-eligible countries in compact negotiations.

The MCC’s Armenia Fact Sheet is provided below.

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Armenia and Millennium Challenge Corporation:

Building a Partnership for Poverty Reduction Through Growth

Armenia Compact Fact Sheet

Millennium Challenge Corporation’s Board of Directors has approved a five-year, $235.65 million Compact with the Government of Armenia.

Today, over one million Armenians live in rural areas and are dependent on semi-subsistence agriculture. Despite good recent economic performance by Armenia and a steady decline in urban poverty, rural poverty remains high: 41% in 2004. Farmers are operating on small plots of land and are constrained by poor roads, inadequate irrigation, and an under-developed market economy.

The Armenia Compact is focused on one goal: the reduction of rural poverty through a sustainable increase in the economic performance of the agricultural sector. Armenia plans to achieve this goal through a five-year program of strategic investments in rural roads, irrigation infrastructure and technical and financial assistance to improve the supply of water and to support farmers and agribusinesses. The Program will directly impact approximately 750,000 people, or 75% of the rural population, and is expected to reduce the rural poverty rate and boost annual incomes.

Rural Road Rehabilitation:

The Compact includes a $67 million project to rehabilitate up to 943 kilometers of rural roads, more than a third of Armenia’s proposed Lifeline road network. When complete, the Lifeline road network will ensure that every rural community has road access to markets, services, and the main road network. Under the Compact, the Government of Armenia will be required to commit additional resources for maintenance of the road network.

Improved Irrigation:

The Compact also includes a $146 million project to increase the productivity of approximately 250,000 farm households (34% of which are headed by women) through improved water supply, higher yields, higher-value crops, and a more competitive agricultural sector. This project consists of two activities:

* An infrastructure activity that aims to increase the amount of land under irrigation by 40% and will improve efficiency by converting from pump to gravity-fed irrigation, reducing water losses and improving drainage; and

* A water-to-market activity that will improve the efficiency of water delivery to farmers and boost farm productivity and profitability through technical assistance and credit support.
Administrative and monitoring and evaluation costs of the Program are budgeted at approximately $23 million.

Engaging Civil Society:

In preparing its proposal for Millennium Challenge Account assistance, Armenia engaged in a comprehensive consultative process that reached out to a broad cross-section of constituents, including rural community members, NGOs and the private sector. Meetings were held outside of city centers to seek input on potential program components and various media outlets were used to reach remote areas. To increase transparency, the Government of Armenia sponsored a process that resulted in three NGOs being named as observers to the Government’s MCA Board of Trustees – an inter-governmental body, chaired by the Prime Minister, and responsible for overseeing the Compact development process. Going forward under the Compact, a Stakeholders’ Committee will be formed to represent the beneficiaries of the program. The Stakeholders’ Committee will be entitled to nominate voting members from Armenia’s NGO sector, to serve alongside the government’s representatives on the Governing Council of MCA-Armenia, the entity that will be established to oversee and implement the Compact.

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