ARMENIA: COUNTRYASSISTANCE strategy
                           CHAIRMAN'S CONCLUDING REMARKS

                                  Meeting of Executive Directors
                                           June 10,2004


        The Executive Directors welcomed the Armenia Country Assistance Strategy (CAS) and
 noted its close linkages with thePRSP and its focus on results.

        Directors commended Armenia'srecentstrongeconomicperformance,theresult                     of
 prudentmonetaryand fiscal policiesandstructuralandgovernancereforms               as wellasstrong
  support from the donor community and the Armenian Diaspora. They nevertheless highlighted
 the level of poverty and unemployment that exists in Armenia. Directors noted that in the period
  ahead the Governmentwillneed to continue withreformsaimedatstrengtheninggovernance
  and fighting corruption. A stronger legal framework and better functioningjudiciary will alsobe
  important.Directors    commended theGovernment'scommitment              to continuereformsinthe
  energy and water sectors. They emphasized the importance of the Medium-Term Expenditure
 Framework, and highlighted the need to give appropriate weights to social expenditures, public
  investment, andthemaintenance        of publicinfrastructure.Directorsalsowelcomedthe
  Government's efforts to improve its capacity for monitoringandevaluation            of development
. results, andlookedforward     to tangibleimprovementsin       this area by thetime of theCAS
  Progress Report.

        Directors expressed broadsupport for theCAS' focus onpromotingprivatesector              led
  growth, makinggrowth more pro-poor,andimprovingbasicservicestoreducenon-income
  poverty. They agreedthat the CASprovidedasoundbasis for future WorldBanksupportto
  Armenia and noted that one of the challenges will be to     ensure thatthebenefits of the rapid
  growth in thecountry become increasinglybroadlyshared.DirectorswelcomedtheCAS'
  emphasis on public sector reform, and recommended that IDA continueto pay close attention to
  financial and judicial sectorreformissues.Theimportance         of helpingtheGovernmentin its
  efforts to improve revenueadministrationwasalsohighlighted.Directorsnotedtheneed                 to
  strengthenArmenia'sbankingsystem        -- includingthroughcapacitybuildingandimproving
  corporate governance -- ifprivate    sector growthis to broaden.Theimportance            of putting
  sufficient attention on SME development was stressed. It was also suggested that the Bank help
  promote trade relationships in the region. Directors broadly agreed with the proposed lending
  levels and triggers, although some suggestedthatthetriggersandtheCASresultsindicators
  could be more specific.

        In addition, Directors encouraged IFC and MIGAto further enhance their activities in the
  country.

        Finally, Directors highlighted the importance of continued attention to aid coordination in
  Armenia.