Banks.am spoke to Asian Development Bank’s (ADB) Armenia Country Director Don Lambert at the margins of the ADB governors annual meeting that took place in Tbilisi on May 2-5.

We are in Tbilisi, where ADB is conducting its annual gathering. And soon EBRD will be having its annual event in Yerevan. I understand this is a coincidence, but I also see some symbolism here: it is like a proof that this part of the world is becoming more interesting for major players, major financial institutions.

I would agree with that. If you look at this region, you see it leading in a lot of ways. You look at both the experience of Georgia over the last 10 years, you see what is happening in Armenia, and you see countries that are opening their economy, they are trying to bring in best practices, especially around digitization. So these countries are emerging as leaders and as examples.

During the past several years Armenia demonstrated impressive economic growth.

One of the things we are looking at as we work with our partnership with Armenia going forward, is on human capacity and governance development, because that is what is going to drive this. This is not an area of the world that has a lot of natural resources. But if you look at the tradition in math and science and physics, chess, you know, there is so much human capacity, that that is really going to be the path to development and how Armenia moves from middle income to upper middle income.

You came to Armenia in July 2023. It is been almost a year. What was your biggest discovery?

One of the things that stood out to me early on was how serious the government is taking adaptation in terms of climate change. I have seen policymakers taking very seriously that temperatures are rising, that Armenia is more exposed to heat increases than other parts of the world on average, and that this is baseline, a semi-arid country that is still quite dependent on agriculture.

2023 was the first year we saw global temperatures on average 1.5 degrees Celsius above pre industrial levels. So climate change is not something of the future. It is happening now. And I have been very impressed with how seriously the Armenian government has been taking adaptation.

It was announced during the ADB governors annual meeting about the replenishment of the Asian Development Fund (ADF) by $5 billion and I was surprised to see that Armenia was among the countries that contributed to that.

It is really significant because when Armenia joined ADB, it was recipient of Asian Development Fund. So these are funds that are typically going to the least developed countries. And now in a very short period of time Armenia has graduated to contributing. And that is really a testament to the Armenian people, the growth cycle, but also to ADB’s partnership with Armenia and the investments we have made, especially in infrastructure.

In 2025 it will be 20 years since Armenia has become a part of the ADB. Let’s try to give some kind of assessment to these two decades.

First of all, we have made some very important contributions in infrastructure, and especially in the transport sector. We are very proud of the work we have done with the North-South corridor, with M6 Highway coming up to Georgia. We expect to participate in the Sisian-Kajaran section of the North-South corridor that is coming forward. There is also some tunnels that we have been working on - Pushkin and the Dilijan tunnels, doing some design work about how you can bring them up to international standards.

The second area would be on private sector development. Armenia is an upper middle income country. And typically for upper middle income countries, we expect our support to shift more and more about how do you generate development through the private sector, and about a quarter of our operations overall, have been in private sector. If you adjust our private sector investments for the GDP of a country, Armenia is actually the second largest market for us. So obviously, what we have invested is much smaller than India or China, but once you adjusted for GDP, it is quite high.

The third space might be in public financial management reform. We have had quite a few successful projects that have looked at how you bring public investment management up to international standards, how you do public financial management, how you grow the capital markets. And the feedback we have gotten from the government, especially the Ministry of Finance, is that this support has been really helpful, and we look forward to working with them going forward.

In April 2024 a project has been approved called “Advancing Green Finance for Sustainable Development”. Can you talk a bit more about that?

I am very excited about this project. It is a technical assistance project for private banks.
We will identify a couple of banks that are interested in bringing in green banking systems - helping them develop a green banking strategy and products, to put the processes and procedures especially around data management, and identification, so that these banks can move forward and start doing meaningful green lending.

If you think about where there is scope to make an impact in climate change, Armenia is a market that is predominantly bank dominant. So, working with the banks, who, then in turn, tend to work with small and medium-sized enterprises, is a real critical entry point.

There is another project that I wanted you to elaborate on - Yerevan Urban Development Investment project. All of us who live in Yerevan know about the problems with transport, traffic jams, etc. How the project is going to help solve or ease these issues?

The project is looking at a key congestion point within the city. We have run some economic analysis and I believe you can help bring traffic times down by 12 minutes on average for those who are going through Admiral Isakov highway. And in general we have made a lot of commitments to urban development. We have got to ease the highway in the north of the city, kind of completing the ring road coming down. That is an area we are looking at. And another one is how do you bring in e-mobility into Yerevan. Air quality within Yerevan is a problem, international statistics bear that out. So e-mobility is going to be a key component of how the city develops. And there with electric buses and charging we could add some significant value and hope to do so in the coming years.

In April ADB presented its forecast for Armenia, which was quite positive. Do you think that despite the security and geopolitical challenges Armenia will be able to maintain economic growth in the coming years?

We are optimistic about Armenia’s growth prospects in the short term. One of the things I would be interested in looking forward is to make that growth sustainable. How do you diversify the Armenian economy and especially its exports? Right now over half the exports are going to Russia. Armenia is increasingly looking westward. And there are markets in the Middle East as well. How do we position the Armenian economy so that it can expect more export to those critical markets where there are real opportunities to take advantage of the human capacity development that you have in Armenia combined with the proximity to really help sustain that growth beyond the next couple of years.

As we look at where the growth is going to come from the next few years, the IT sector is obviously a natural space. One of the things we are looking at is technical vocational training, because you have got an economy whose workers are not always well matched to what the demands are. So there are opportunities in the coming years to work with the government to revamp the technical vocational programs, so that they are better suited to meeting the demands of the market.

Ara Tadevosyan spoke to Don Lambert