EUR 26.5m World Bank loan for public sector modernization projects in Armenia

A World Bank ICT survey found that only five percent of Armenian citizens and businesses currently use online government services.

The World Bank Board of Executive Directors approved today a EUR 26.5 million loan for the Forth 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 assist the Government in improving the efficiency of, and access to, selected government services for businesses and citizens. 

Accessing many public services in Armenia still requires the physical presence of citizens. This is most apparent in rural areas. Challenges also exist for citizens to access already existing digital services. A World Bank ICT survey found that only five percent of Armenian citizens and businesses currently use online government services.

The Government of Armenia has prioritized the digital economy as a key pillar of 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 Digitalization Strategy for 2021-2025 lays the foundation for the development and implementation of this approach.

“Modernization of public administration and efficient delivery of public services can foster inclusive growth and reduce inequalities,” 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 effective public sector, capable of delivering efficient and accessible services, also provides greater equality of opportunities for citizens and supports productivity of the private sector.”

The project will support the Government’s approach to public sector modernization, through three components anchored in public administration, data management, and digital service delivery systems. The first component focuses on the overall efficiency of public administration and supports improvement of the productivity of the Civil Service Office, public 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 of government service delivery. Support of local governments, through the piloting of activities related to re-engineering databases, data infrastructure and computing systems, will align them with the business processes of central government agencies.

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

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

The World Bank will provide a EUR 26.5 million ($29.9 million equivalent) IBRD loan of variable-spread, with a 14.5-year grace period and a total repayment term of 25 years. The Government contribution is EUR 5.3 million ($6 million equivalent). Since joining the World Bank in 1992, and IDA in 1993, commitments to Armenia have totaled approximately $2,477,870 million.