Closed Compact Report: Armenia Compact | March 2021

Compact Summary

In March 2006, MCC and the GoA signed a five-year, $235.65 million compact designed to increase the country’s economic growth and reduce poverty by investing in the economic performance of the agricultural sector. The compact sought to advance this goal through strategic investments in rural roads, irrigation infrastructure, technical assistance, and financial support to water supply entities, farmers, and commercial agribusinesses.

The compact consisted of two projects:

  • The Irrigated Agriculture Project ($145.67 million) aimed to address the physical, managerial and financial investments needed to generate sustainable increases in rural income through irrigated agriculture. This project consisted of two complementary activities: (i) the Infrastructure Activity and (ii) the Water-to-Market Activity (WtM).
  • The Rural Road Rehabilitation Project (RRRP) ($67.1 million) aimed to rehabilitate up to 943 km of the high-priority lifeline network, a network of secondary and local roads which aimed to ensure that all communities, towns and villages were linked to the main road network, either directly or through other communities.

The compact had activities in every region in Armenia, excluding the capital of Yerevan. Through the investment, GoA and MCC expected approximately 426,000 people to benefit over 20 years.

It is important to note that the Armenia Compact, its concepts, project and activity designs, and M&E plans were developed prior to the full operationalization of MCC’s gender and social inclusion (GSI) guidance and evidence-based approaches to compact development, as well as MCC’s investment criteria on Women’s Economic Empowerment. It is possible that MCC’s subsequent GSI and M&E processes would have resulted in a different design, especially with regards to delivering benefits to women and disadvantaged groups, as well as more robust tracking and analysis of gendered and inclusion-oriented disaggregated data, indicators, and outcomes. Consequently, MCC is unable to provide an analysis or more fulsome discussion of the distributional impact of the investments and differentiated socio-economic outcomes of this compact. Read more about MCC’s current approach to gender and inclusion.

The compact was likewise completed prior to MCC’s adoption of the IFC Performance Standards and the MCC Road Safety Policy. Nonetheless, the work in Armenia set some important precedents for MCC’s management of environment and social issues and led to improved practices and approaches in areas such as resettlement, contractor health and safety, revitalizing a RAMSAR 1 site, management of asbestos containing materials, and public consultations. Read more about MCC’s current approach to environmental and social performance.

Under the MCC country ownership model, MCC’s country counterparts are responsible for implementing MCC-funded programs. Partner governments establish accountable entities typically known as Millennium Challenge Accounts to manage implementation for compact projects. In Armenia, MCA-Armenia (MCA-A) was created soon after signing the compact to implement the country’s programs.

By the end of the compact in September 2011, 99.7 percent of the compact budget of $177 million that remained after MCC placed a hold on $58.65 million in RRP funding was spent to reduce rural poverty through a sustainable increase in the economic performance of the agricultural sector in Armenia. Following the conclusion of the compact, the GoA decided that the Foreign Financing Projects Management Center Program Implementation Unit (FFPMC), on behalf of the Ministry of Finance, would be the successor to MCA-A, and would be responsible for post-compact oversight of compact activities to ensure the sustainability of MCC’s investments. A special project management group was formed within the FFPMC, comprised of a small team of full- and part-time previous MCA-A staff, funded by the GoA from the interest revenue generated by the WtM Credit component. This Project Management Group operated for several years, winding down operations by the time the final MCC evaluation was published in 2014.

  • 1. A RAMSAR site is a wetland site designated to be of international importance under the Ramsar Convention. The Convention on Wetlands, known as the Ramsar Convention, is an intergovernmental environmental treaty established in 1971 by UNESCO, which came into force in 1975.