Chapter 5 | PROJECTS CONTRIBUTING TO THE OPEC FUND’S CLIMATE FINANCE
ARMENIA
Green Inclusive and Sustainable Development
Situation Analysis of Climate Impacts
The OPEC Fund is co-financing the Green Inclusive and Sustainable Development Program in Armenia with a pol- icy-based loan of ¤50 million. The program aims to sup- port Armenia’s transition towards a sustainable, inclusive and green economy through three main approaches: a) improving climate resilience and reducing environmental impacts, b) enhancing equity and human capital devel- opment, and c) improving public sector governance and efficiency. The loan supports a series of reforms aimed at improving climate resilience, environmental management and energy efficiency.
Located at the heart of the South Caucasus, landlocked Armenia faces an array of challenges. Over the past dec- ades, Armenia has made significant strides in economic growth and poverty reduction. However, the twin crises of the COVID-19 pandemic and military conflict with Azerbaijan have underscored the fragility of these gains. 20 Due to a combination of political, geographic and social factors, Armenia is recognized as highly vulnerable to the impacts of climate change. Armenia is ranked 57th on the ND-GAIN index. Figure 4 presents a time-series plot illustrating Armenia’s progress in the ND-GAIN Index over time. 21
Figure 4: Armenia ND-GAIN Index
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FUNDING DETAILS:
Source: https://gain.nd.edu/our-work/country-index
• Total program cost: US$153.61 million • OPEC Fund contribution: ¤50 million • Type of financial instrument: Policy-based loan • World Bank contribution: US$100 million • OPEC Fund climate finance as percentage: 44 percent of which 16 percent adaptation finance and 28 percent mitigation finance
Armenia faces significant disaster risks, ranking 116 out of 191 countries on the 2024 INFORM Risk Index 22 , primarily due to its high exposure to natural hazards such as river- ine, flash and coastal floods, as well as tropical cyclones. The country’s climate change challenges are profound, with unpredictable climate phenomena leading to in- creased droughts and shifting precipitation patterns that
TIMELINE:
• The Ministry of Finance of Armenia officially requested co-financing from the OPEC Fund in June 2022. • The World Bank and the OPEC Fund approved the program in March 2023. • The OPEC Fund loan was disbursed in December 2024.
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