This Country Partnership Strategy (CPS) examines the Republic of Armenia's support for shared prosperity and poverty reduction through accelerated economic growth and job creation during FY14-17. The last CPS period (FY09-13) was characterized by relative political stability, which is likely to continue during the next period.

Regional security risks remain high due to the latent conflict over Nagorno-Karabakh and closed borders with Azerbaijan and Turkey. However, deepening relations with Russia and the European Union provide Armenia with a political anchor, lessening the threats and tensions with its neighboring countries. Before the 2009 global financial crisis, the Armenian economy grew by about 12 percent per annum, but growth was narrowly based on expansion of residential construction, domestic services, and foreign exchange inflows. Recent analytical work carried out by the World Bank Group (WBG) suggests that Armenia's new drivers of growth will have to be industry (especially manufacturing) and modern services competing in international markets where high quality, decently paid jobs can be created. Against this background, the CPS places private sector-led job creation at the center of the WBG's response.

The WBG's active portfolio in Armenia consists of 14 operations, including five investment lending operations in infrastructure (transport, electricity, water, and irrigation), four in social sectors (health, education, social protection, and social investment fund), three in public sector (judicial reform, public sector modernization, and tax administration), and two in sources of growth (ICT and agriculture). Over the next three years, the WBG aims to consolidate development progress in the areas of social protection, education, and health where ownership and implementation capacity are already strong. Overall the outlook for Armenia is positive.