CPS sets out how the World Bank Group (WBG) will support Armenia in implementing the Armenia Development Strategy 2025.
In transport, the focus will be on effective implementation of the ongoing Lifeline Road Network Improvement Projects because of their importance for poverty reduction. The Bank's focus on the lifeline road network is fully targeted at the bottom 40 percent which are those who rely on the secondary (lifeline) roads for their economic opportunity (mainly farmers) who would have improved access to markets, services, and reduced travel time and risk. Improving the quality of key regional and rural roads is part of a wider strategy to improve both domestic and external connectivity and overall economic competitiveness. The main highway network is not covered by the Bank's support because the Asian Development Bank and European Investment Bank are the main donors. The Bank's projects will also strengthen the capacity of the Ministry of Transport and Communication to manage the road network. The ongoing operation builds on the previous project, particularly in improving the use of efficient contracts and the sustainability of the road sector.
In addition, the CPS will support reforms aimed at addressing regulatory weaknesses in air transport to improve Armenia's air connectivity. As a land-locked country, air transport is particularly important for Armenia's trade and global connectivity. Given that only one of Armenia's four land borders is open (the border with Georgia), air transport is the only other gateway for trade. This is why air transport issues are being addressed through the DPL, because of its importance to growth and competitiveness. Flying to and from Yerevan is relatively expensive, and there are limited options for routes and timings. Costs are often significantly higher than to neighboring Tbilisi. Higher prices are partially explained by the lack of competition between airlines. A reduction in concentration-an indication of the market power that can be exerted by companies on a given route-by half, could lead to a drop in ticket prices in the range of 20 to 30 percent. Under the proposed DPL, the government will increase transparency, investigate possible non-competitive practices, define its air transport policy, and assess capacity building needs.
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