Russia loans Armenia $ 500m

May 20, 2009
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, MOSCOW, May 20 – Russia on Wednesday agreed to lend Armenia 500 million dollars to help the post-Soviet nation withstand the economic crisis, a finance ministry spokesman said.

The loan agreement was signed at a meeting in Moscow between Russian Finance Minister Alexei Kudrin and his Armenian counterpart Tigran Davtian.

The 15-year loan is to be spent on "measures to develop infrastructure, small and medium-sized business and the Armenian economy as a whole," Russian finance ministry spokesman Andrei Saiko told AFP.

It comes with a tolerable interest rate of four percent, he said.

The loan reflects Russia\’s close economic ties to Armenia, which is in a state of partial isolation due to conflicts with Azerbaijan and Turkey.

It is also in line with a Kremlin policy of rewarding allies with financial aide for their loyalty.

Moscow has repeatedly propped up Belarus\’ struggling economy and earlier this year promised more than two billion dollars in loans and aide to Kyrgyzstan.

That announcement came after the Central Asian state said a US military base on it territory would be closed.

Most recently, Prime Minister Vladimir Putin, visiting Mongolia last week, promised Ulan Bator "necessary credit resources," reflecting Russia\’s desire for a foothold in the resource-rich neighbour.

Ukraine has also asked Russia for a five-billion-dollar loan, but the Kremlin said the country\’s pro-Western stance jeopardized Kiev\’s chances of getting the money.

The finance ministry spokesman declined to comment on the Ukrainian request Wednesday.

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