RURAL ASSETS CREATION PROGRAM

Semi-Annual Report 1 July, 2015

Rural Areas Economic Development Programs Implementation Unit State Agency of Government of Armenia

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Contents

Acronyms ...... 2

Summary ...... 3

Introduction ...... 5

Component 1. Support to Fruits and Nuts Sector ...... 7 Sub-component 1.1 Establishment of Fruit Armenia OJSC ...... 7 IFAD mid-term review mission: comments and recommendations with regards to the sub-component implementation ...... 8 Bottlenecks for Nursery Establishment ...... 9 Establishment and Maintenance of Orchards ...... 9 Major obstacles for establishment and maintenance of orchards ...... 10 Management of Fruit Armenia Company ...... 10 Sub-component 1.2. Promotion of Export and Standards ...... 12

Component 2. Rural Infrastructure ...... 12 Sub-component 2.1. Public Utilities Investments ...... 13 Procurement ...... 13 Sub-component 2.2. Value Chain Infrastructure ...... 16

Component 3. Program Management ...... 17

Component 4. Rural Financing (Horticultural Credits) ...... 19

Progress report 2015, first half-year: Annexes ...... 21

Annex I – Actual expenditure by financial sources vs plan, first half-year of 2015 ...... 21 Annex II – Actual expenditure and balance by projects and categories, 2014 ...... 25 Annex III – Results and Impacts Management System indicators ...... 26 Annex IV – RACP actual expenditure by financing sources, annual and cumulative ...... 28 Annex VI – Summary of key agreed actions with timeframes, IFAD Mid-Term Review Mission ...... 30 Fiduciary aspects ...... 32

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Acronyms

“Rural Areas Economic Development Programmes Implementation Unit” State Agency of RAED PIU (PIU) Republic of Armenia Government Staff

RACP Rural Assets Creation Program GoA Government of the Republic of Armenia IFAD International Fund for Agricultural Development OFID The OPEC Fund for International Development

DANIDA Danish International Development Agency FDR- AR RACP Final Design Report – Appraisal Report AWPB Annual Work Plan and Budget PSC Programme Steering Committee FA “Fruit Armenia” OJSC RI Rural Infrastructure PUI Public Utilities Investments RTI (VCI) Rural Transport Investments (renamed: Value Chain Infrastructure)

RFF “Rural Finance Facility” State Agency FREDA Fund for Rural Economic Development in Armenia USD Dollar of United States of America

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Summary

This Progress Report describes the financial and physical progress of the Rural Assets Creation Program as of 1 July, 2015 in comparison with the planned indicators specified in 2015 Annual Work Plan & Budget.

2015 AWPB was approved by the Program Steering Committee on 4 May, 2015 and by IFAD - on 8 April, 2015.

The table below summarizes the financial performance by components as of 1 July, 2015. In addition, the actual expenditures are presented compared to the 2015 AWPB planned indicators and the Appraisal targets.

Table 1. Financial performance by components as of 01.07.2015

Component Total AWPB Total Appr. Plan Act. % Appr. Act. % 1 Support to Fruits and Nuts Sector 897 192 21% 13,500 2,506 19% 1.1 Fruit Armenia Operations 668 134 20% 0 1,760 0% 1.2 Promotion of Standards and Exports 0 0 0% 0 0 0% 1.3 Fruit Armenia Overhead cost 229 57 25% 0 746 0% 2 Infrastructure 15,407 3,570 23% 30,891 17,456 57% 2.1 Public Utilities Investments 13,412 3,570 27% 28,718 17,456 61% 2.2 Rural Transportation Inv. 1,995 0 0% 2,173 0 0% 3 Programme Management 761 257 34% 2,952 2,551 86% 3.1 Programme Management 761 257 34% 0 2,551 0% 4 Rural Finance 1,235 26 2% 4,328 60 1% 4.1 Economic Modeling and Feasibility 185 26 14% 236 60 25% 4.2 Credit Lines 1,000 0 0% 3,638 0 0% 4.3 Avisory Support 50 0 0% 454 0 0% Total 18,301 4,044 22% 51,671 22,572 44%

Component 1. Support to Fruits and Nuts Sector

 Since the Program start and up to 1 July, 2015, AMD 2.5 million (cumulative) has been disbursed, which amounts to 18.5 % of the planned target.  After FA’s consolidation and other program changes, the progress of FA amounted to USD 192, 000, which is 21 % of the planned target.  The implementation of Promotion of Export and Standards sub-component is cancelled by mutual agreement of the Government of Armenia and IFAD. Respective amendments in the Program Financing Agreement and reallocation of funds followed. 2015 AWPB does not foresee any expenditure for the sub-component.

Component 2. Rural Infrastructure

Sub-component 2.1 Public Utilities Investment

1. Progress over construction works: OFID funds In the period of 1 January – 30 June, 2015 construction works were carried out in 60 facilities. Three new construction contracts have been signed to undertake gas and water supply works in rural communities.

IFAD funds:

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Within the rehabilitation of community water supply systems, selection of 15 communities and design have been carried out. The design documents are to be submitted to IFAD by end of July, after which tender for construction and implementation will commence.

Sub-component 2.1 Value Chain Infrastructure

Selection of 12 communities, preparation of feasibility studies and designs have been carried out. The design documents are to be submitted to IFAD by end of July, after which tender for construction and implementation will commence.

Component 3. Program Management

 As at 1 July, 2015, the sub-component implementation is USD 257,000 in comparison with 2015 AWPB indicators, which is 34% of planned target.  A number of changes in the Program have been initiated following IFAD Mid-Term Review Mission recommendation that subsequently were agreed by the Government of Armenia. Specifically, the Government of Armenia has applied to IFAD with thr request of extending the completion date of the Program Financing Agreement along with introducing drastic changes in the Program. Currently the amendments to the Agreement are in the process of being approved by IFAD, expected to be finalized by August this year.  In pursuance of IFAD Mid-Term Review Mission recommendation, amendments to the Danish Grant Financing Agreement were initiated that have been approved by IFAD and submitted to acceptance by the Government of Armenia.

Component 4. Rural Financing (Horticultural Credits)

 At present the new loan product has been developed targeting the establishment of orchards with 7 most feasible fruit varieties and/or technological upgrade of existing ones.  Tender for the selection of the technical consultant for the provision of Advisory support is planned for which the ToR has been drafted by PIU and delivered to IFAD for consideration.  For the disbursement of the newly developed credit product, the selection of participating financial institutions, tender for disbursement of credit funds, signing of credit contracts and allocation of funds will be undertaken in the nearest future.

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Introduction

The Rural Assets Creation Program - RACP represents an investment of over USD 52 million financed by the International Fund for Agriculture Development (IFAD), the OPEC Fund for International Development (OFID), Danish International Development Agency (DANIDA), the Government of Armenia and RACP beneficiaries. The principal goal of RACP is betterment of economic and social status of rural population in Armenia.

Below chart demonstrates the financial indicators by components and financiers, Appraisal targets vs the actuals.

Chart 1. Financial performance by components and donors. Planned Appraisal targets vs actuals/cumulative, by01.07.2015

Financial performance by component and financier, appraisal vs cumulative actual, year 2015

Financial performance by component, 2015 Financial performance by financier, 2015 20,000 35,000 20,000 30,891 18,000 30,000 16,000 25,000 13,489 14,000 12,605

20,000 17,456 12,000 Appr. Appr. 13,500 10,000

USD USD '000 15,000 Act. Act. USD USD '000 7,472 8,000

10,000 6,000 4,200 4,328 3,327 3,300 3,193 5,000 2,506 2,952 2,551 4,000 2,710 60 1,777 1,390 2,000 500 0 232 49 0 0 1 Support to Fruits and Nuts 2 Infrastructure 3 Programme Management 4 Rural Finance 0 Sector IFAD loan IFAD grant OFID loan Danish grant Gov. budget Gov. tax Clients Reflows /other

Plan, Financial performance by component, 2015 Actual, Financial performance by component, 2015 Appraisal, Financial performance by financier, 2015 Actual, Financial performance by financier, 2015

1 Support to Fruits and 1 Support to Fruits and Nuts Sector 5% 0% 0% 8% Nuts Sector 6% 15% 6% 15% 26% 26% 11% 0% 11% 14% 1% 2 Infrastructure 2 Infrastructure IFAD loan IFAD loan 6% IFAD grant IFAD grant 8% OFID loan OFID loan Danish grant Danish grant 3 Programme 1% 3 Programme Management Gov. budget Gov. budget Management 8% 0%

4 Rural Finance 4 Rural Finance 60% 39% 56% 78%

The major portion of the Program funds is channelled to implementing of two components financed by IFAD, OFID, GoA and beneficiary contributions, namely 26% is allocated to the Support to Fruits and Nuts Sector, and 60% is allocated to the Rural Infrastructure. The Rural Financing (Horticulture Credits) is a new program component financed by DANIDA grant.

The chart above clearly demonstrates that almost 43.68 % or USD 22.58 million of total program funds has been disbursed by 1 July, 2015. Specifically:

1. Approx. USD 2.5 million allocated to the Support to Fruits and Nuts Sector amounting to 19% of planned expenditure; 2. Approx. USD 17.5 allocated to the Rural Infrastructure amounting to 57% of planned expenditure, 3. USD 2.6 million allocated to the Program Management amounting to 86% of planned expenditure, and 4. USD 60 thousand to Rural Financing amounting to 1% of planned expenditure.

Below chart represents the financial performance by components and donors, planned vs annual/actual, 1st half- year of 2015.

Chart 2. Actual financial performance vs 2015 AWPB planned indicators by 01.07.2015.

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Financial performance by component and financier, plan vs actual, year 2015

Financial performance by component, 2015 Financial performance by financier, 2015

15,407 6,768 16,000 7,000

14,000 6,000

12,000 5,000 4,572 10,000 4,000 8,000 Plan Plan 2,876 USD USD '000 Act. Act. USD USD '000 3,000 2,594 6,000 3,570 4,000 2,000 1,427 1,422 1,196 1,235 2,000 897 761 711 192 257 26 1,000 293 230 195 0 40 0 21 0 0 1 Support to Fruits and Nuts 2 Infrastructure 3 Programme Management 4 Rural Finance 0 Sector IFAD loan IFAD grant OFID loan Danish grant Gov. budget Gov. tax Clients Reflows /other

Plan, Financial performance by component, 2015 Actual, Financial performance by component, 2015 Plan, Financial performance by financier, 2015 Actual, Financial performance by financier, 2015

1 Support to Fruits and 1 Support to Fruits and Nuts Nuts Sector 8% 0% 7% 5% Sector 0% 4% 6% 1% 5% 25% 5% 7% 0% 16% 18% 2 Infrastructure 2 Infrastructure IFAD loan IFAD loan IFAD grant IFAD grant OFID loan OFID loan 0% Danish grant Danish grant 3 Programme Management Gov. budget Gov. budget 3 Programme 8% 6% Gov. tax Gov. tax Management 0% 6% 4 Rural Finance 4 Rural Finance 37% 64% 84% 88%

As of 1 July, 2015, the rate of AWPB implementation is 22% or USD 4.004.0 million. The progress affecting factors are explained in the respective paragraphs hereunder.

Chart 3. Financial performance by years vs Appraisal targets. Actuals by 01.07.2015.

Appraisal targets vs expenditure and projections; all financing sources and Appraisal targets vs expenditure and projections; all financing sources and components components, cumulative

Appraisal vs exp. and projections, all financing sources, all components; for 2015 the table Appraisal vs exp. and projections, all financing sources, all components; for 2015 the table represents exp. by 30/06/2015 represents exp. by 30/06/2015; cumulative 14,000 60,000 12,459 12,385 12,089 12,058 51,671 48,990 12,000 50,000

10,000 40,000 36,933 8,358 8,000 Appraisal Apprais 30,000 al

Actual and 24,548 USD USD '000 USD USD '000 6,000 5,104 projected 22,572 4,748 18,528 4,044 20,000 4,000 13,780 12,459 2,680 10,000 2,000 5,422

318 318 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

The Chart 3 above shows that 2015 financial performance exceeds the Appraisal target nearly with 51 %, the affecting major factor for which was deviations from program modalities and circumscribed timeframes. It resulted in program changes and leaving the considerable portion of program funds for the final year.

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PROGRESS DESCRIPTION BY COMPONENTS

Component 1. Support to Fruits and Nuts Sector

The component aims to increase the assets and income of poor rural smallholders in the areas of the program intervention by linking them to the fruits and nuts value chains, providing the primary producers with the comprehensive package of modern horticulture technologies, simultaneously supporting other key links of the value chain. The component comprises of two sub-components:

(I) Establishment of Fruit Armenia OJSC, and (II) Promotion of Standards and Exports.

Below chart represents the financial performance of the component.

The total budget of the component is valued USD 13.5 million by the program design document. Since the Program commencement till 1 July, 2015 the amount of USD 2.5 million has been disbursed (cumulative), which equals to 18.5% of the planned target. The implementation rate is 21% against 2015 AWPB planned indicators amounting to USD 192.000.

Chart 4. Financial performance vs Appraisal. Actual expenditure by 01.07.2015

Appraisal vs expenditure and projections; all financial sources, component 1 Appraisal vs expenditure and projections; all financial sources, cumulative, component 1

Appraisal vs exp. and projections, all financing sources, component 1; for 2015 the table Appraisal vs exp. and projections, all financing sources, component 1; for 2015 the table represents exp. by 30/06/2015 represents exp. by 30/06/2015; cumulative 4,500 14,000 13,469 13,495 4,037 3,968 4,000 12,000 11,305

3,500 3,301 10,000 3,000

Appraisal 7,337 2,500 8,000 2,164 Apprai sal

Actual and USD USD '000 USD USD '000 2,000 projected 6,000

1,500 4,037 1,001 4,000 1,000 788 2,314 2,506 506 2,000 1,313 500 192 525 19 26 19 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Sub-component 1.1 Establishment of Fruit Armenia OJSC

The main objective of the program implemented by the Fruit Armenia OJSC is to help increase the income of rural poor smallholders through increased efficiency of stone fruits and nuts production and improved horticulture value chain. To achieve this goal, intensive type orchards are intended to establish in Tavush, Vayots Dzor and Aragatsotn marzes with modern, high efficiency, low growing varieties of different maturity periods. The approach is to establish the orchards with application and demonstration of advanced technologies, such as drip irrigation, hail and frost nets.

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IFAD mid-term review mission: comments and recommendations with regards to the sub-component implementation

IFAD support team was closely following the progress over the component implementation throughout 2014 (June 1-12, November 2-8, November 24-December 9). IFAD’s Mid-Term Review Mission (November 2-8, November 24 – December 9) took notice of implementation of comments and recommendations put forward by 2013 IFAD Supervision Mission.

In the latest Aide-Memoire the impact of FA activities was evaluated unsatisfactory. The main criticism comes from the fact that FA was able to establish only 50 ha out of planned 700 ha, and even those are far from being considered sustainable models for replication by smallholders from financial and technological perspectives. It was also stressed that FA was incapable of transferring technological novelties to farmers and private nurseries. On the whole, FA could not assume its foreseen role as a vehicle for the sub-sector development.

In addition, the Aide-Memoire noted that the projected cash flow of FA would be negative for the period between end of the Program in 2016 till the breakeven point in 2019. FA needs to search ways to cover this financial gap of nearly USD 1 million and present possible options to the consideration of its Board. For the remaining program period the mission recommended not extending orchards beyond already planted areas, consolidating FA operations to minimize the risks and refraining from drawing down the loan of USD 7 available in the design.

Below is the annual progress of FA’s activities compared to 2015 AWPB planned financial and physical indicators. In pursuance of 2015 AWPB and procurement plan approved by the FA’s Board of Directors, the following activities have been undertaken.

Nursery Establishment

1. Nursery establishment. In accordance with the 2014 nursery design, during the first half of 2015 maintenance activities have been undertaken in the nursery, such as irrigation, clearing of weeds, restoration of furrows, mellow, invitro planting of walnut, and installation of protective shadow nets for invitro walnut trees. 2. Extension of varietal mother orchard. The nursery mother orchard has been extended with 4 varieties of peach and nectarine, totally 50 trees. 3. Procurement of agro tools and machinery. Local tender has been taken place and agro tools (sapling puller) and machinery have been procured. The tender took place in 2014, and the actual payments and receiving of purchase – February, 2015. 4. Acquisition of in vitro saplings. Due to irrigation water problems in 2014, as well as low rate of survival of saplings as those did not pass the complete cycle of climatic adaptation in the mother nursery to be successfully transported, additional 2000 saplings have been planted in the nursery that were received in May 2015 as compensation in line with the contract signed with the foreign suppler. 5. Nursery maintenance. Maintenance activities for the nursery, engrafted saplings and mother orchard have been undertaken, such as mellow, measures against weeds, disease and pests.

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Bottlenecks for Nursery Establishment

The FA has reported the following bottlenecks for establishment of nursery:  The FA’s business plan and 2015 procurement plan foresees the erection of guardhouse and toilet in the area of nursery, however IFAD objected the design submitted by FA reasoning the high price quoted, although the price limit previously was approved by IFAD. Further to this IFAD noted the feasibility of an open air pavilion, or leaving the issue under FA’s responsibility. FA’s leadership refrained from taking the responsibility of independently making decision. As a result, the construction of guardhouse and toilet has remained unaccomplished.  No other substantial obstacles have been revealed for current activities.

Below is FA’s activities and expenditure in 2015 (table 2).

Table 2. Establishment of FA’s nursery, first half-year of 2015, Actuals

Plan: Financial and physical performance, year 2015, component 1.1.1 plan Narrative on status, rationale, challenges, Description CumulativeCumulative Expenditure Expenditure 2015 Cumulative output Narrative on status, rationale, solutions Expen challenges, solutions Cumulative 2015 Expenditure #/ha/km HH/ppl Planned Actual % Planned Planned Actual % Planned Actual % Establishment of FA HQ and 1.1.11.1.1 Nursery 81,500 9,893 12% 81,500 ------Equipment and goods for “FA” 1.1.1 575.00 office 6,000 - 0% 6,000 ------Planned for 01/2015-03/2015 (not started). 1.1.1 579.00 2014 Financial Audit 10,000 9,893 99% 10,000 1# 1# 100% - - - Planned for 01/2015-05/2015 (not started). Planned for 03/2014-01/2015 (contract entered into on time). Removed from the 1.1.1 711.00 FA office renovation 45,000 - 0% 45,000 254# - 0% - - - Programme Installation of a guardhouse/toilet in the 1.1.1 836.00 Nursery 6,000 - 0% 6,000 1# - 0% - - - Planned for 02/2015-05/2015 (not started). 1.1.1 837.00 Training of farmers 3,000 - 0% 3,000 30# - 0% - - - Commercial costs (harvesting 1.1.1 838.00 and tarsnportation items) 1,500 - 0% 1,500 ------1.1.1 846.00 Nursery maintenance works 8,000 - 0% 8,000 15ha - 0% - - - Technical supervision of “FA” office renovation and nursery fencing Planned for 11/2013-01/2015 (contract entered into on time). Procurement done in time, most of the supervision services are provided, the payment will be done once 1.1.1 847.00 2,000 - 0% 2,000 ------office renovations works are finished.

Establishment and Maintenance of Orchards Purchase of planting material and establishment of orchards  In 2014 international tender was arranged and saplings of cherry, sweet cherry, peach and nectarine were purchased. The planting of these saplings have been completed in spring of 2015 in Vayots Dzor and Tavush Marzes. Specifically, the following has been planted:  17.22 ha of sweet cherry in Ptghavan, Vernashen and Khndzorut communities;  12.2. ha of plum in Debedavan and Azatek communities;  4.7 ha of peach/nectarine in Debedavan and Azatek communities. All care activities have been undertaken in the orchards (April, May, June 2015). Selection of new areas (January – March, 2015)  Plots in Vayots Dzor, Aragatsotn and Tavush Marzes have been analysed and evaluated for establishment of new orchards. Areas have been preliminarily been selected in - Vernashen and Khndzorut communities of Vayots Dzor Marz, and - Debetavan and Ptghavan communities of Tavush Marz.

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 Meetings and discussions with community leaders and plot owners have been held, memorandums have been signed. Signing of contracts with plot owners for temporary use of lands (January, March, June, 2015)  Contracts on temporary use of lands have been signed applying the template amended as per IFAD’s Supervision Mission of September 2013, i.e. excluding the advance payment to land owners during first four years.  Mapping of newly selected areas has been accomplished. Procurement of hail nets (September, 2014): The contract for procurement of the hail net was concluded in 2014, the actual payment and supply for which was done in April 2015. Works are in progress.

Major obstacles for establishment and maintenance of orchards

The FA has reported the following bottlenecks for establishment and maintenance of orchards:  The FA’s business plan and 2015 procurement plan foresees the erection of guardhouse and toilet in the area of orchards, however IFAD objected the design submitted by FA reasoning the high price quoted, although the price limit previously was approved by IFAD. Further to this IFAD noted the feasibility of an open air pavilion, or leaving the issue under FA’s responsibility. FA’s leadership refrained from taking the responsibility of independently making decision. As a result, the construction of guardhouse and toilet has remained unaccomplished.  Procurement and installation of drip irrigation in the orchards was to be initiated by spring 2015 in Arin and Azatek communities of Vayots Dzor Marz and Aragatsavan community of Aragatsotn Marz, however the clearance from IFAD for the start of tender was received in July. No other material obstacles have been revealed for current activities of orchard establishment and maintenance.

Management of Fruit Armenia Company Consultancy and training (March, April, May 2015)  To secure that due maintenance is provided for newly established orchards, clearance from IFAD was received to select and sign consultancy contract with two international horticulturists. The experts visited Armenia in spring 2015 and carried out the pruning and shaping of trees.  In addition, the experts delivered training to farmers and land owners on various aspects of orchard care, namely – fertilizing, irrigation, pest and disease control, pruning and shaping of trees, harvest management. The horticulturist Harold Van Den Boghart visited Armenia in 15-19 March, 2015. During his visit he provided hands-on training to farmers of Aragatsavan community of Aragatsotn Marz on pruning and shaping of stone fruit varieties, organized theoretical and practical courses in Azatek community of Vayots Dzor Marz, as well as delivered consultancy on such issues as fertilizing stone fruit trees, soil analysis, improving soil quality, measures against pests. Sebastien Linard, French horticulturist, visited Armenia April 27 – May 2, 2015. During his visit he delivered consultancy in Vayots Dzor and Tavush Marzes on cultivation, fertilizing and care of trees.

Other organizational matters (April - June, 2014) After the tender for audit, the winning organization undertook the audit of the Company for 2014. The audit outcomes have been presented to the Ministry of Agriculture and IFAD.

Below is the FA’s financial and physical progress for the 1st half-year of 2015. Table 3. Orchard establishment and maintenance, first half-year of 2015, Actuals

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Plan: Financial and physical performance, year 2015, component 1.1.2 plan Narrative on status, rationale, challenges, Description CumulativeCumulative Expenditure Expenditure 2015 Cumulative output Narrative on status, rationale, solutions Expen challenges, solutions Cumulative 2015 Expenditure #/ha/km HH/ppl Planned Actual % Planned Planned Actual % Planned Actual % 1.1.21.1.2 Establishment of FA Orchards 586,800 43,616 7% 586,800 ------This activity is not included in the PP as FA will deal with up to 100 workers, including land- owners, several tractor-drivers and drivers transporting stones, trees and other agricultural load in three communities, not one or two companies. These activities are under operational costs and include ploughing, gathering of stones, leveling, digging of pits for trees, planting of trees, Orchard layout and planting digging of furrows for irrigation etc.The works (including digging of pits and planed for Azatek, Debetavan, Vernashen 1.1.2 560.00 trenches) 30-32 ha 20,000 987 5% 20,000 32ha 46.3ha 145% 288ppl - 0% orchards;

Purchase and installation of Planned for 02/2015-05/2015 (not started). 1.1.2 565.00 drip irrigation systems for 50ha 240,000 8,261 3% 240,000 50ha 4.5ha 0% - - - Azatek, Arin aragatsavan

Procurement and Installation of 1.1.2 566.00 hail-protection systems on 5ha 110,000 - 0% 110,000 5ha - 0% - - - Planned for 02/2015-08/2015 (not started).

Orchard operation and maintenance (including pruning, fertilization, irrigation, disease and rodents’ control 1.1.2 573.00 activities), 83 ha 105,000 34,367 33% 105,000 83ha 50.1ha 60% - - - Performance of land preparation works (plough, gathering of stones, tillage, 1.1.2 713.00 leveling and so on) 30-32 ha 27,000 - 0% 27,000 32ha - 0% - - - On going

Planned for 03/2015-05/2015 (not started). Agreed with IFAD on direct contracts with international experts proposed by FA . These consultants are for training of farmers on pruning, training, disease control, fertilization, maintenance of peach, nectarine, walnut and sour cherry trees and on implementation of modern agro-techniques, for which we got IFAD's no-objection to sign a direct contract. FA will need these consultants 1-2 times during the season. It will be several 1.1.2 839.00 International consultants 40,000 - 0% 40,000 4# - 0% - - - consultants and separate contracts. Installation of Planned for 01/2015-05/2015 (not started). guardhouses/toilets in Works planed for Azatek, Aragatsavan, Arin, 1.1.2 840.00 orchards – 5 clusters 30,000 - 0% 30,000 5# - 0% - - - Archis, Ptghavan, Nursery From the beginning of the Programme this item was included in the "Operational costs" Revenue advance payment to section of the PP, but is not performed through 1.1.2 841.00 farmers 10,000 - 0% 10,000 ------procurement procedures. Mapping and soil analyses of Planned for 01/2015-03/2015 (not started). land plots of orchards The works planed for Debetavan, Vernashen 1.1.2 848.00 established in 2015 30-32 ha 4,800 - 0% 4,800 32ha - 0% - - - orchards Table 4. Fruit Armenia Company Management Costs; first half-year of 2015, Actuals

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Actual: Financial and physical performance, year 2015, component 1.3 progress Narrative on status, rationale, challenges, Description CumulativeCumulative Expenditure Expenditure 2015 Expenditure Cumulative output Narrative on status, rationale, solutions challenges, solutions Cumulative 2015 Expenditure #/ha/km HH/ppl Planned Actual % Planned Actual % Planned Actual % Planned Actual % 1.31.3 Fruit Armenia Overhead cost 229,130 189,136 83% 229,130 57,370 25% ------1.3.11.3.1 Staff costs 120,540 132,392 110% 120,540 36,992 31% ------1.3.1 588.00 Executive Director 20,040 28,395 142% 20,040 6,355 32% ------Assistant to the Executive Director /HR Specialist/ 1.3.1 589.00 Translator 13,524 16,106 119% 13,524 4,971 37% ------1.3.1 590.00 Finance Manager / Accountant 15,900 5,335 34% 15,900 5,335 34% ------Deputy Executive Director / 1.3.1 593.00 Nursery Manager 17,880 10,779 60% 17,880 1,743 10% ------1.3.1 594.00 Lawyer 15,900 23,060 145% 15,900 5,260 33% ------Procurement Specialist/Office 1.3.1 595.00 Manager 14,280 19,128 134% 14,280 4,576 32% ------1.3.1 598.00 Marz Agronomist 8,160 12,043 148% 8,160 4,779 59% ------1.3.1#### Marz Agronomist 8,160 11,273 #### 8,160 3,525 43% ------1.3.1 603.00 Driver 6,696 6,273 94% 6,696 448 7% ------1.3.21.3.2 Vehicles 20,000 5,194 26% 20,000 5,194 26% ------

Repair/maintenance of vehicles and equipment (including fuel 1.3.2 842.00 and vehicles’ insurance) 20,000 5,194 26% 20,000 5,194 26% ------1.3.31.3.3 Staff other costs 32,900 37,192 113% 32,900 827 3% ------Travelling costs (international 1.3.3 610.00 and local) 20,000 28,903 145% 20,000 - 0% ------Security costs (office and 1.3.3 612.00 nursery), (12 months) 8,400 751 9% 8,400 335 4% ------1.3.3 613.00 Cleaning lady (12 months) 2,000 585 29% 2,000 94 5% ------IT Support (part time) (12 1.3.3 614.00 months) 2,500 6,953 278% 2,500 398 16% ------1.3.61.3.6 Other 55,690 14,357 26% 55,690 14,357 26% ------Office maintenance costs (electricity, water, office supplies, cleaning materials, cellular communication, 1.3.6 843.00 internet) 20,690 6,101 29% 20,690 6,101 29% ------Other costs (bank charges, official receptions, mail and 1.3.6 844.00 messenger service) 20,000 5,311 27% 20,000 5,311 27% ------1.3.6 845.00 Contingencies 15,000 2,945 20% 15,000 2,945 20% ------

Sub-component 1.2. Promotion of Export and Standards

The sub-component of Promotion of Export and Standards includes the following activities:

 Support to agro-laboratories;  Promotion of export; and  Support to smallholder farms and nurseries outside of contact arrangements with the FA.

No activities were initiated under this sub-component. Moreover, certain outcomes have been achieved in the sector without the program intervention. The GoA and IFAD have agreed that there is no need to pursue further steps under this sub-component given occurred changes in this sphere and the program amendments. Therefore, the sub-component is cancelled ensuing relevant adjustments in the Program Financing Agreement and reallocation of funds. 2015 AWPB does not foresee any expenditure for this sub-component.

Component 2. Rural Infrastructure

Investments under this component are targeted at i) improving of living conditions and boosting economic growth of rural vulnerable communities, and ii) developing smallholder farms that receive support through the component 1. Construction and/or rehabilitation of infrastructure in rural mountainous poor communities are planned, such as water and gas supply systems, drainage structures, rural roads and ancillary facilities that would support and add value to other program investments. RI component comprises of two sub-components: Rural Utilities Investments (RUI) and Rural Transportation Investments (RTI), which after amendments in RACP Financing Agreement is renamed Value Chain Infrastructure.

Below chart represents RI financial performance by 1 July, 2015.

Chart 6. Financial performance vs Appraisal. Actual expenditure by 01.07.2015.

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Appraisal targets vs expenditure and projections, all financing sources; Appraisal targets vs expenditure and projections, all financing sources; Component 2 cumulative, Component 2

Appraisal vs exp. and projections, all financing sources, component 2; for 2015 the table Appraisal vs exp. and projections, all financing sources, component 2; for 2015 the table represents exp. by 30/06/2015 represents exp. by 30/06/2015; cumulative 9,000 35,000 8,078 30,987 30,987 7,791 7,791 8,000 7,327 30,000 7,000 7,000 25,000 23,659 6,000

Appraisal 5,000 20,000 17,456 Apprais 15,868 al

3,824 Actual and USD USD '000 USD USD '000 4,000 3,570 13,886 projected 15,000 3,061 10,825 3,000 10,000 7,791 2,000 5,000 3,824 1,000 - - - - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

After amendments in RACP Financing Agreement, the remaining IFAD funds would be reallocated from the FA to the Rural Infrastructure component and ultimately would target the rehabilitation of water supply systems in rural areas.

In 2015 AWPB USD 15.4 million is allocated for the activities.Since the start of the program up until 1 July, 2015, activities estimated at USD 17.5 (cumulative) have been accomplished, which is 56.3 % of the planned indicator. It is worth mentioning that in the 1st half-year of 2015 USD 3,570 thousand has been disbursed, which equals to 23.2 % of indicator planned for 2015.

Sub-component 2.1. Public Utilities Investments

Procurement

In accordance with the AWPB and making use of AMD 1.478.0 billion from OFID funds saved within RACP program, reconstruction of irrigation networks on 1540 ha in Lori, Vayots Dzor, Tavush and Shirak Marzes, as well as construction/rehabilitation of water supply systems in 3 communities are envisaged for the year 2015. It has been agreed with OFID that these funds would be mainly channelled to rehabilitation of primary and secondary irrigation systems, as well as water supply networks.

It is OFID’s request that the procurement process be optimal as far as possible and that a single tender be held in 2 lots for design and one tender in 3 lots - for civil works, by marzes.

As specified in OFID’s Procurement Guidelines, the International Competitive Bidding (ICB) method shall be applied for all lots of tenders, open to all countries.

Under RACP, International Competitive Bidding in 3 lots was announced for civil works:

# Package Sub-projects

1 RACP/CW/ICB-2015/066 Water supply in Her Her and Gladzor communities, reconstruction of internal irrigation networks in Agarakadzor and Rind communities of Vayots Dzor Marz; gas supply in Sarnaghbyur community of Shirak Marz; gas supply in Talin and Dashtadem communities of Aragatsotn Marz.

2 RACP/CW/ICB-2015/067 Water supply in Bagratashen, Gandzakar, Sevkar and Vazashen communities, gas supply in Navur and Itsakar communities of Tavush Marz

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3 RACP/CW/ICB-2015/075 Water supply in Dsegh, Chochkan and Mets Ayrum communities of Lori Marz

The tender announcement was posted in “Hayastani Hanrapetutyun” newspaper on 1 May, 2015, on “Dg Market” international web-site on 29 April, 2015 and on PIU’s www.raed.am web-page. The deadline for submission of application was 29 May, 2015 at 1500.

The tender committee undertook the study and evaluation of applications. The committee suggested that the winning organizations be those proposing the lowest price. The tender results were submitted to PIU’s Steering Committee approval on 15 June, 2015.

The list of winning organizations is the following: Lot/Contract Proposed Winner Contract Price (VAT included)

RACP/CW/ICB-2015/066 “Alpago” Ltd – “Baghramyanshin” OJSC 702, 752, 653.00 AMD JV RACP/CW/ICB-2015/067 “Blesk” Ltd Armenian Branch 1, 276, 578, 692.00 AMD RACP/CW/ICB-2015/075 “Araratshin” Ltd – “Gharabaghtsyan - 947, 010, 275. 00 AMD Shin” Ltd JV

Duration of construction works in all above-mentioned facilities is 12 months.

The tender for selection of a consultant has been held with the method of Quality and Cost Based Selection for community water supply and irrigation design works in Lori, Vayots Dzor, Shirak, Aragatsotn, Tavush and Gegharkunik Marzes under RACP program.

Progress on Civil Works: OFID

Since 1 January up to 30 June, 2015 construction works have been carried out in 60 facilities as follows:

 extension of gas supply distribution networks in 25 facilities constructed with the Program funds in previous years;  reconstruction of 2 mid pressure feeders;  gas supply in 20 communities;  reconstruction of irrigation networks in 3 facilities;  reconstruction of water supply systems in 10 facilities.

Details on undertaken works can be found in the table below.

End of June 2015 new construction contracts have been concluded: RACP/CW/ ICB- 2015/066, RACP/CW/ ICB- 2015/067 և RACP/CW/ ICB- 2015/075. In pursuance of these contracts civil works for gas and water supply will start in 3 communities of Vayots Dzor, 1 community of Shirak , 2 communities of Aragatsotn, 6 communities of Tavush and 3 communities of Lori Marzes of Armenia.

Currently negotiations are in progress with OFID for extending the Program completion date. It is worth mentioning that although the Program Financing Agreement was signed 8 June, 2011, the implementation of the Rural Infrastructure component started with delay in 2012 due to amendment in the document related to nomination and confining the responsibilities of the Loan Administrator. Thus, in order to fully disburse the funds and complete the civil works, the completion dates of respective contracts need to be extended.

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Progress on Civil Works: IFAD

PUI sub-component extension – community water supply systems

Taking into consideration the findings and recommendations of the IFAD’s Mid-Term Review Mission in 2014, an agreement was reached with IFAD that the funds not provided to the Fruit Armenia as a result of the Company’s consolidation be reallocated to the PUI component activities, specifically to financing irrigation and water supply projects. Nevertheless, given the upcoming completion of the Program and acknowledging that the selection of irrigation projects is a timetaking process, it was further agreed that the program funds would mainly be targeted to the implementation of water supply projects under the sub-component. The selection and evaluation of water supply projects was guided through by IFAD’s consultant. A basis for selection of the final list of investments served the feasibility study for improvement and development of water supply and sanitary systems in rural communities of Armenia, which was undertaken by the request of GoA and financed by KfW within the German-Armenian partnership. In addition to KfW developed priority indicators, the system of evaluation and classification of infrastructure proposed by IFAD was considered, particularly underscoring the following:

(i) Current service level; (ii) Cost per beneficiary; (iii) Existence of arrangements for operation and maintenance; (iv) Area of program intervention, as well as other technical and social factors.

As stated above, the selection of investments was carried out with guidance of IFAD’s consultant. The short list is now approved and the recommendation is that the PIU start the procurement procedure and design/construction works as per IFAD requirements.

The progress on said activities as of 1 July 2015 is the following: the communities are selected and the designs are prepared to be submitted to IFAD by end of July. The procurement and implementation of civil works will commence in due course.

The Cumulative expenditure plan for the sub-component is shown in below table. 2015 annual disbursement is presented in Annex I.

Table 6. Financial and physical performance, 1st half-year of 2015, Actuals/cumulative

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Actual: Financial and physical performance, year 2015, component 2.1 progress Narrative on status, rationale, Description Cumulative Expenditure Cumulative output 2015 Expenditure challenges, solutions Cumulative #/ha/km HH/ppl Planned Actual % Planned Actual % Planned Actual % Planned Actual % 0 0 - 0 ------0.5 2.1 2.1 Public Utilities Investments 25,433,413 3,569,731 14% 13,412,437 3,569,731 27% ------0.5 2.1.1 2.1.1 Natural Gas Supply & Irrigation/Water Supply 25,433,413 3,569,731 14% 13,412,437 3,569,731 27% ------Lot 1 - “Drinking water supply of Gladzor community, Irrigation water supply of Agarakadzor and Rind communities of Vayots Dzor marz, Gasification of Sarnaghbyur community of Shirak marz, Gazification of Talin and Dashtadem communities of Aragatsotn Planned for 05/2015-06/2016 (contract 0 2.1.1 810.00 marz” 1,464,068 109,795 7% 732,000 109,795 15% 29.5km - 0% - - - entered into on time). 0 2.1.1 810.01 “Drinking water supply of Gladzor community of Vayots Dzor marz ------14.5km - 0% - - - Irrigation water supply of Agarakadzor and Rind communities of 0 2.1.1 810.02 Vayots Dzor marz ------200ha - 0% - - - 0 2.1.1 810.03 Gasification of Sarnaghbyur community of Shirak marz ------9.5km - 0% - - - Gassification of Talin and Dashtadem communities of Aragatsotn 0 2.1.1 810.04 marz ------5.5km - 0% - - - Lot 2 - “Drinking water supply of Bagratashen, Gandzakar, Sevqar and Vazashen communities, Gasification of Navur and Itsaqar Planned for 05/2015-06/2016 (contract 0 2.1.1 811.00 communities of Tavush marz 2,659,539 - 0% 1,330,000 - 0% 60.8km - 0% - - - entered into on time). Drinking water supply of Bagratashen, Gandzakar, Sevqar and 0 2.1.1 811.01 Vazashen communities ------44.3km - 0% - - - 0 2.1.1 811.02 Gasification of Navur and Itsaqar communities of Tavush marz ------16.5km - 0% - - - Lot 3 – "Drinking water supply of Dsekh, Chochkan and Mets Ayrum Planned for 05/2015-06/2016 (contract 0 2.1.1 812.00 communities of Lori marz” 1,972,938 112,789 6% 985,434 112,789 11% 28.6km - 0% - - - entered into on time). Design and Author’s Control (Drinking Water Supply in Lori, Vayots Dzor, Shirak, Aragatsotn, Tavush and Gegharkunik Marzes of Planned for 04/2015-09/2015 (contract 0 2.1.1 817.00 Armenia, 2015) RACP/TA/QCBS-2015/068 447,830 - 0% 411,000 - 0% ------entered into on time). Lot 1- Drinking water supply of Barekamavan community, natural gas supply of Ptghavan, Deghdzavan, Jujevan, Debedavan, Aghavnavank, Bagratashen, Khachardzan, Gosh and Ajgedzor Planned for 10/2014-12/2016 (contract 0 2.1.1 819.00 communities of Tavush marz 1,996,602 713,507 36% 1,397,622 713,507 51% 56.68km - 0% 11276ppl - 0% entered into on time). 0 2.1.1 819.01 Drinking water supply of Barekamavan community ------1# - 0% 312ppl - 0% Natural gas supply of Ptghavan, Deghdzavan, Jujevan, Debedavan, Aghavnavank, Bagratashen, Khachardzan, Gosh and Ajgedzor 0 2.1.1 819.02 communities of Tavush marz ------56.68km - 0% 10964ppl - 0% Lot 2- Drinking water supply of Arteni community, natural gas supply of Sasunik, Aghdzq, Karbi, Ohanavan, Arteni, Aragatsavan communities, and Jalalyan, Poshter and Lusavorich blocks of Planned for 10/2014-12/2016 (contract 0 2.1.1 820.00 Aparan city of Aragatsotn marz 4,084,885 1,404,808 34% 2,859,419 1,404,808 49% 111.32km - 0% 20856ppl - 0% entered into on time). 0 2.1.1 820.01 Drinking water supply of Arteni community ------4.5km - 0% 3040ppl - 0% Natural gas supply of Sasunik, Aghdzq, Karbi, Ohanavan, Arteni, Aragatsavan communities, and Jalalyan, Poshter and Lusavorich 0 2.1.1 820.02 blocks of Aparan city of Aragatsotn marz ------106.82km - 0% 17816ppl - 0% Lot 3- Rehabilitation of irrigation water network of Dzoraghbiur community of Gegharkunik marz, natural gas supply of Malishka, Planned for 10/2014-12/2016 (contract 0 2.1.1 821.00 Getap, Por, Zaritap and Arpi communities of Vayots Dzor marz 1,458,403 541,764 37% 1,020,882 541,764 53% 41.3km - 0% 11884ppl - 0% entered into on time). Rehabilitation of irrigation water network of Dzoragyugh community 0 2.1.1 821.01 of Gegharkunik marz ------360ha - 0% 6520ppl - 0% Natural gas supply of Malishka, Getap, Por, Zaritap and Arpi 0 2.1.1 821.02 communities of Vayots Dzor marz ------41.3km - 0% 5364ppl - 0% Construction of Mid Pressure Feeders in Artanish Community of Planned for 09/2014-04/2015 (contract 0 2.1.1 822.00 Gegharkunik Marz and Khnatsakh Community of Syunik Marz 428,362 133,386 31% 342,689 133,386 39% 10.36km - 0% - - - entered into on time). Lot 1- Natural gas supply of Voskepar, Baghanis, Voskevan, Koti, Barekamavan and Hovq communities of Tavush marz, Khnatsakh, Khoznavar and Spandarian communities of Syunik marz, Artanaish Planned for 11/2014-06/2015 (contract 0 2.1.1 823.00 community of Gegharkunik marz 324,806 118,841 37% 324,806 118,841 37% 17.84km - 0% 1928ppl - 0% entered into on time). Lot 2- Natural gas supply of Tsakhkashen, Apna, Vardenut, Aragats, Hartavan, Shenavan, Kuchak, Kosh, Vardenis and Arai communities Planned for 11/2014-06/2015 (contract 0 2.1.1 824.00 of Aragatsotn marz 619,936 188,713 30% 619,936 188,713 30% 24.54km - 0% 2176ppl - 0% entered into on time). Technical Supervision of Civil Works (Tavush Marz, for 2014-2015 Planned for 10/2014-07/2016 (contract 0 2.1.1 825.00 works), RACP/TA/CQ-2013/052/1 60,938 1,450 2% 31,000 1,450 5% ------entered into on time). OFID financed Technical Supervision of Civil Works (Aragatsotn marz, for 2014- Planned for 10/2014-07/2016 (contract 0 2.1.1 826.00 2015 works), RACP/TA/CQ-2013/052/2 62,757 - 0% 31,000 - 0% ------entered into on time). OFID financed

Technical Supervision of Civil Works (Vayots Dzor, Syunik and Planned for 10/2014-07/2016 (contract 0 2.1.1 827.00 Gegharkunik marzes, for 2014-2015 works), RACP/TA/CQ-2013/052/3 43,500 - 0% 25,000 - 0% ------entered into on time). OFID financed Technical Supervision of Civil Works /Aragatsotn marzes 2014-2015/ Planned for 11/2014-06/2015 (contract 0 2.1.1 828.00 extention works) RACP/TA/CQ-2014/058/2 10,000 - 0% 5,000 - 0% ------entered into on time). OFID financed Design & Author’s Control (Gas Supply and Water Supply in Tavush Planned for 12/2014-04/2015 (contract 0 2.1.1 829.00 Marz, Vayots Dzori Marz 2015) RACP/TA/CQ-2014/064 119,815 13,609 11% 119,815 13,609 11% ------entered into on time). OFID financed Technical Supervision of Civil Works /Tavush, Syunik, Gegharqunik marzes 2014-2015/network extention works) RACP/TA/CQ- #REF! 2.1.1 830.00 2014/058/1 5,200 2,077 40% 3,000 2,077 69% ------#REF! Design and Author’s Control (Gas Supply and Water Supply in Lori, Vayots Dzor, Shirak and Aragatsotn Marzes, 2015) RACP/TA/CQ- Planned for 12/2014-04/2015 (bid op. 0 2.1.1 831.00 2014/065 143,834 187,934 131% 143,834 187,934 131% ------done on time). OFID financed Planned for 04/2015-11/2015 (not started). In this section mentioned all the civill works that will be done under IFAD component. There is funds which will reallocated from FA. It includes 4.8 mlnn iirigation. Output and outreach we can put after feasability study and base line, but for now we can provide prelinimary data. After all this processes this ID will be seperated to several ID-s according to 0 2.1.1 850.00 All Civil Works /Water Supply, IFAD/ 9,500,000 - 0% 3,000,000 - 0% ------civill works contracts. 0 2.1.1 ######## Contingencies 30,000 41,058 137% 30,000 41,058 137% ------

Sub-component 2.2. Value Chain Infrastructure 1 As no progress had been achieved under this sub-component, an agreement was reached with 2014 IFAD’s Mid- Term Review Mission to undertake the following:

1. Soliciting formal and complete investment proposals from 12 communities; 2. Procurement of feasibility studies for investments selected under VCI, including baseline study data. 3. Approval of the short list for 2015 VCI investments by the PSC;

1RTI sub-component is renamed Value Chain Infrastructure after amendment in the Loan Agreement

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4. Producing the feasibility study; 5. Signing of contract for detailed design of VCI investments; 6. Signing of contract for civil works of VCI investments.

The progress on said activities as of 1 July 2015 is the following: 12 communities are selected, the feasibility studies and designs are prepared to be submitted to IFAD by end of July. The procurement and implementation of civil works will commence in due course.

Table 7. Financial and physical performance, 1st half-year of 2015, Actuals

Actual: Financial and physical performance, year 2015, component 2.2 progress Narrative on status, rationale, Description Cumulative Expenditure Cumulative output 2015 Expenditure challenges, solutions Cumulative #/ha/km HH/ppl Planned Actual % Planned Actual % Planned Actual % Planned Actual % 0 0 - 0 ------0.5 2.2 2.2 Rural Transportation Inv. 2,000,150 - 0% 1,994,941 - 0% ------Planned for 04/2015-11/2015 (not 0 2.2 10,001.00 All Civil Works (IFAD) 1,885,000 - 0% 1,885,000 - 0% 27.5km - 0% 1454ppl - 0% started).

Design and Author’s Control (Irrigation Water Supply in Tavush and Planned for 04/2015-08/2015 (contract 0 2.2.1 813.00 Vayots Dzor Marzes of Armenia, 2015) RACP/TA/QCBS-2015/072 71,875 - 0% 66,666 - 0% ------entered into on time). Planned for 04/2015-12/2015 (not 0 2.2.1 814.00 Technical Supervision (all civil works) 28,275 - 0% 28,275 - 0% ------started). Technical feasibility assessment RACP/TA/SSS-2015/001 RACP/TA/SSS-2015/001 Technical feasibility assessment, RACP/TA/SSS-2015/001 Technical feasibility assessment, RACP/TA/SSS-2015/001 Planned for 02/2015-03/2015 (not 0 2.2.1 852.00 15,000 - 0% 15,000 - 0% ------started). According to the above table, the actual expenditure for the sub-component as at 1 July 2015 is null.

Memorandum of Understanding is signed between the PIU and the CARD foundation. CARD implements the “Markets for Meghri” program, which is targeted at development of horticulture experience in Meghri community by providing technical and financial support for establishment and growth of orchards. Within the established collaboration, the CARD foundation will undertake feasibility and baseline studies with its own resources (following the IFAD approved ToR) to present the rationale for needs of infrastructure investments in the region, and the PIU will implement the proposed infrastructure program. Moreover, the CARD foundation may come up with ideas of similar investments in other areas.

CARD, though with some delay, has selected the consulting organization to implement the works specified by the feasibility studies. The summary report and investment proposal is to be submitted to PIU by August 2015.

The risks associated with implementation of the sub-component activities in 2015 are as follows:  Proximity of program completion date;  Technical, financial and management issues as regards the civil works;  Seasonal unfavourable conditions.

Component 3. Program Management The PIU is responsible for implementation of the programs with the financial support and guidance of IFAD, OFID, Government of Armenia and other donor organizations. More specifically, the tasks of PIU include planning, budgeting, financial management, monitoring, impact assessment and reporting of on-going programs, as well as development and initiation of new programs in line with the terms and provisions of Framework Agreements reached with other program implementers.

A number of changes occurred in the Program that were proposed by IFAD’s Mid-Term Review Mission and consequently agreed by the Government of Armenia. The GoA has applied to IFAD with the request for extending the Program Financing Agreement and introducing drastic changes in the Program. The proposed changes to the Program Financing Agreement are described below:

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 To consolidate the FA, at the same time providing support to the Company for keeping up with already initiated activities (namely the establishment of orchards) and development of the nursery. To allocate USD 1.5 million (from IFAD funds) before June, 2016 for establishment of orchards and management of other activities. Before reaching the breakeven point in 2017, try to raise financing from the Government (in the amount of USD 1 million, or USD 1.5 million in case of deciding on the option with the nursery development) for covering the projected financial gap.  To cancel activities under the Promotion of Export and Standards sub-component.  To reallocate remnant available funds to financing rehabilitation of water supply systems under the Rural Infrastructure component.

Currently the amendments to the Agreement are under consideration of IFAD, and as soon as confirmed, respective changes will be incorporated into the AWPB.

Further to the above mentioned amendments and in pursuance of the recommendation put forward by IFAD’s Mid-Term Review, adjustment to the Danish grant financing agreement has been initiated. This would ensue review of the Danish grant design to serve the realization of its development goal: use of the grant’s strategic potential as concessional financing targeted at development of horticultural value chain. In addition, IFAD strictly requested to stress provision of credits and technical support for horticulture value chain while adjusting the program, which would create synergies with the RFF and the Fund for Rural Economic Development in Armenia (FREDA) to be financed within the upcoming “Infrastructure and Rural Finance Support Program” (IRFSP). As a result of reallocation of funds, USD 967 500 would be provided to the FREDA, and the grant completion date would be prolonged with two years, till the year 2017.

To undertake the Program Financial Audit for 2014 of the RAED PIU, IFAD recommended including 3 auditing companies acceptable to the Republic of Armenia into the short list, based on the World Bank listing of eligible auditing companies for Europe and Central Asia Region. The consultant was selected with the Least Cost Selection (LCS) method, following the Procurement Guidelines publicized by IFAD in September 2010. Invitation for submittal of proposals was sent to three organizations included into the short list, to which one organization – “SOS-Audit” LLC (Armenia) responded with a proposal. The results of evaluation of the technical proposal for the “Program Financial Audit (2014) of RAED PIU SA of GoA”, RACP/TA/CQ-2014/047 were submitted to approval of IFAD by the established procedure. After receiving IFAD’s no objection, the opening and evaluation of the Financial Proposal by the “SOS-Audit” LLC was undertaken. The contract is signed for the period of April 15 – May 31, 2015.

At present the PIU carries out preparations for the new IRFSP program, the start-up workshop for which is planned for December 2015.

Below is the Table 8 summarizing the financial performance under the Program Management component. Table 8. Financial performance of the Program Management component, first half-year of 2015

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Actual: Financial and physical performance, year 2015, component 3 progress Description Cumulative Expenditure Cumulative output Narrative on status, rationale, challenges, solutions 2015 Expenditure Cumulative #/ha/km HH/ppl Planned Actual % Planned Actual % Planned Actual % Planned Actual % 0 0 - 0 ------0.5 3 3 Programme Management 760,818 882,560 116% 760,817 256,581 34% ------0.5 3.1 3.1 Programme Management 760,818 882,560 116% 760,817 256,581 34% ------0.5 3.1.1 3.1.1 Equipment, Goods and Vehicles 4,863 18,587 382% 4,863 1,655 34% ------0 3.1.1 631.00 Equipment, Goods and Vehicles 4,863 18,587 382% 4,863 1,655 34% ------0.5 3.1.2 3.1.2 TA, Training and Specialists 123,119 63,501 52% 123,119 28,124 23% ------This ID includes training for PIU specialists 4 person for 2 weeks in Turin in ITC(ILO) training center. ID also includes 0 3.1.2 632.00 Training and workshop 41,658 1,984 5% 41,658 157 0% ------one workshop for 80 people.

This ID includes one planing engineer consultant, one lawyer consultant, and 3 constraction consultants (we have already one for OFID civill works and plan if it will be nessesary to hire 2 more for IFAD and OFID civill works). The dadline for the assighnments is planed for one yaer which may be revised later based on the actual demand. It also includes the fee 0 3.1.2 633.00 Management services 47,420 45,853 97% 47,420 12,303 26% ------creating link beetwen programs of RFF and PIU 4000 USD 0 3.1.2 849.00 Project financial audit (2014FY) 34,041 15,663 46% 34,041 15,663 46% ------Planned for 01/2015-07/2015 (not started). 0.5 3.1.3 3.1.3 Staff costs 326,679 389,952 119% 326,679 108,325 33% ------0 3.1.3 636.00 Head of office management division 13,700 21,820 159% 13,700 5,816 42% ------

0 3.1.3 637.00 Head of M&E, Programme cordination&development 13,700 16,559 121% 13,700 1,463 11% ------0 3.1.3 638.00 Head of financial division 13,700 21,869 160% 13,700 5,831 43% ------0 3.1.3 639.00 Chief accountant 13,700 16,822 123% 13,700 5,816 42% ------0 3.1.3 640.00 Accountant 13,700 18,484 135% 13,700 5,261 38% ------0 3.1.3 643.00 Accountant 13,700 18,115 132% 13,700 5,540 40% ------0 3.1.3 644.00 Head of procurement division 13,700 20,375 149% 13,700 5,816 42% ------0 3.1.3 645.00 Procurement specialist 13,700 20,711 151% 13,700 6,576 48% ------0 3.1.3 646.00 Economist engineer 13,700 14,658 107% 13,700 4,177 30% ------0 3.1.3 647.00 Head of construction supervision division 13,700 20,969 153% 13,700 4,850 35% ------0 3.1.3 648.00 Design supervision engineer 13,700 19,626 143% 13,700 5,486 40% ------0 3.1.3 649.00 Construction supervision engineer 1 13,700 19,623 143% 13,700 5,514 40% ------0 3.1.3 650.00 Construction supervision engineer 2 13,700 20,691 151% 13,700 6,123 45% ------0 3.1.3 651.00 Construction supervision engineer 3 13,700 - 0% 13,700 - 0% ------0 3.1.3 652.00 Assistant/Secretary 9,588 8,997 94% 9,588 2,097 22% ------0 3.1.3 653.00 Component coordination specialist - 9,917 - - 5,816 ------0 3.1.3 654.00 M&E Analist 13,700 1,714 13% 13,700 1,714 13% ------0 3.1.3 655.00 M&E Specialist 13,700 13,138 96% 13,700 2,804 20% ------0 3.1.3 656.00 Office manager 13,700 2,257 16% 13,700 - 0% ------0 3.1.3 657.00 External relations and Gender Specialist 13,700 18,940 138% 13,700 5,816 42% ------0 3.1.3 658.00 Driver 1 5,028 5,633 112% 5,028 1,575 31% ------0 3.1.3 666.00 Driver 2 5,028 5,879 117% 5,028 1,506 30% ------0 3.1.3 667.00 Driver 3 5,028 5,976 119% 5,028 1,506 30% ------0 3.1.3 669.00 Driver 4 5,028 5,754 114% 5,028 1,506 30% ------0 3.1.3 670.00 Driver 5 5,028 5,549 110% 5,028 1,506 30% ------0 3.1.3 671.00 Driver 6 5,028 5,555 110% 5,028 1,528 30% ------0 3.1.3 672.00 Translator 10,595 11,625 110% 10,595 3,245 31% ------0 3.1.3 673.00 Lawyer 13,700 20,540 150% 13,700 5,875 43% ------0 3.1.3. 635.00 Director 16,028 18,157 113% 16,028 3,563 22% ------0.5 3.1.4 3.1.4 Ongoing costs 131,602 152,208 116% 131,601 45,423 35% ------0 3.1.4 679.00 Operating and banking charges 1,391 3,719 267% 1,391 111 8% ------0 3.1.4 680.00 Energetic services 7,500 5,612 75% 7,500 962 13% ------0 3.1.4 681.00 Communal Services 302 3,720 ##### 302 2,102 696% ------0 3.1.4 682.00 Telecommunication services 16,505 25,031 152% 16,505 8,526 52% ------0 3.1.4 683.00 Insurance services 17,057 9,493 56% 17,057 1,669 10% ------0 3.1.4 684.00 Office and other property Rent 88,847 104,632 118% 88,847 32,053 36% ------0.5 3.1.5 3.1.5 Business trip costs 43,232 36,148 84% 43,232 9,986 23% ------0 3.1.5 685.00 Local business trips 6,701 6,224 93% 6,701 2,589 39% ------0 3.1.5 686.00 International business trips 36,531 29,924 82% 36,531 7,396 20% ------0.5 3.1.6 3.1.6 Other contracting services 48,002 73,182 152% 48,002 23,692 49% ------0 3.1.6 687.00 Administrative services 5,349 2,028 38% 5,349 - 0% ------0 3.1.6 688.00 Computer services 11,700 15,261 130% 11,700 4,572 39% ------0 3.1.6 689.00 Information services 13,227 1,029 8% 13,227 - 0% ------0 3.1.6 690.00 Representative Costs 17,726 54,863 310% 17,726 19,119 108% ------0.5 3.1.7 3.1.7 Ongoing Repair and Maintenance 43,152 52,051 121% 43,152 15,327 36% ------0 3.1.7 691.00 Office repair and maintenance 15,416 8,576 56% 15,416 2,415 16% ------0 3.1.7 692.00 Vehicles&Equipment repair and maintenance 27,736 43,475 157% 27,736 12,912 47% ------0.5 3.1.8 3.1.8 Substances 36,361 71,791 197% 36,361 18,668 51% ------0 3.1.8 693.00 Office materials and supplies 10,003 9,380 94% 10,003 1,748 17% ------0 3.1.8 694.00 Training and educational items 584 25,918 ##### 584 12,425 2127% ------0 3.1.8 695.00 Fuel and Oil 24,315 33,923 140% 24,315 2,567 11% ------0 3.1.8 696.00 Public household and food items 1,459 2,570 176% 1,459 1,928 132% ------0.5 3.1.9 3.1.9 Other 3,808 25,140 660% 3,808 5,383 141% ------0 3.1.9 697.00 Taxes and other mandatory social payments 2,106 2,541 121% 2,106 1,558 74% ------0 3.1.9 698.00 Other costs 1,702 9,335 548% 1,702 3,825 225% ------0 3.1.9 800.00 TBD (To be determined) - 13,264 ------

Component 4. Rural Financing (Horticultural Credits)

The goal of the component is the reduction of rural poverty through providing support for development of fruits and nuts value chains in disadvantaged mountainous rural communities of Armenia. The grant amount of 23.51 million Danish Krones (nearly USD 4.13 million) is provided by the Danish International Development Agency (DANIDA) to the Republic of Armenia to undertake the following activities within RACP program:

(i) Credit lines for substantial technological upgrading or planting of small scale orchards, (ii) Economic modelling and feasibility studies, and (iii) Technical support to farmers.

Table 9. Financial and physical performance, first half-year of 2015, actual

19

Actual: Financial and physical performance, year 2015, component 4 progress Description Cumulative Expenditure Cumulative output Narrative on status, rationale, challenges, solutions 2015 Expenditure Cumulative #/ha/km HH/ppl Planned Actual % Planned Actual % Planned Actual % Planned Actual % 0 0 - 0 ------0.5 4 4 Rural Finance 3,086,757 26,027 1% 1,235,097 26,027 2% ------0.5 4.1 4.1 Economic Modeling and Feasibility 185,097 26,027 14% 185,097 26,027 14% ------0 4.1 832.00 Economic Modeling and Feasibility 185,097 26,027 14% 185,097 26,027 14% ------Planned for 09/2014-06/2015 (bid op. done on time). 0.5 4.2 4.2 Credit Lines 2,717,000 - 0% 1,000,000 - 0% ------0 4.2. 833.00 Credit lines 2,717,000 - 0% 1,000,000 - 0% ------0.5 4.3 4.3 Avisory Support 184,660 - 0% 50,000 - 0% ------0 4.3. 834.00 Advisory support 184,660 - 0% 50,000 - 0% ------

The Program Financing Agreement was signed by IFAD on 29 November, 2013 and by the Government of Armenia – on 23 December, 2013. The Program entered into force on 20 February, 2014. The contract of 5 months duration between “Ameria” consulting company and the PIU was signed on 22 December, 2014. At this point, the works within the service provision contract are completed. The outcome is a new loan product for establishment of new orchards with 7 most feasible fruit varieties and/or technological upgrading of existing orchards. Another tender for selection of a technical consultant is planned, for which the ToR is drafted by PIU and sent to IFAD for approval.

Within the new loan program, selection of participating financial institutions, tender for disbursement of credit funds, signing of loan agreements and allocation of funds are planned to be undertaken.

Presently the Danish grant financing Agreement is undergoing major amendments as described in the paragraph above under the Programme Management section.

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Progress report 2015, first half-year: Annexes

Annex I – Actual expenditure by financial sources vs plan, first half-year of 2015

Actual expenditure by financing source vs plan, year 2015 Description Total expenditure Expenditure by financing source Category Quarter

Reflow Planned for Actual for IFAD Danish Gov. s

ID 2015 2015 % of plan IFAD loan grant OFID loan grant budget Gov. tax Clients /other IFAD loan IFAD grant OFID loan Danish grant I II III IV ------1 Support to Fruits and Nuts Sector 897,430 191,867 21% 163,735 6 - - - 28,126 ------1.1 Fruit Armenia Operations 668,300 134,497 20% 107,627 - - - - 26,870 ------1.1.1 Establishment of FA HQ and Nursery 81,500 20,761 25% 18,138 - - - - 2,623 ------334.00 Tube well construction in the FA nursery 22,000 56,221 256% 48,725 - - - - 7,496 - - 4 ------550.00 FA Tissue laboratory renovation (sqm) 60,000 - 0% ------4 ------556.00 Nursery main pipeline construction 60,000 - 0% ------4 ------557.00 Nursery head unit of drip irrigation 10,000 - 0% ------4 ------558.00 Nursery water reservior/pressure tank 22,000 - 0% ------4 ------Purchase of wallnut scions (fernor, 562.00 franquete, Lara, Chandler and other 18,480 6,103 33% 4,860 - - - - 1,243 - - 4 ------varieties) 569.00 Purchase of stone fruits rootstock (GF677) 100,000 - 0% ------4 ------570.00 Nursery drip irrigation system 3ha 9,000 - 0% ------4 ------Nursery agricultural vehicles and 571.00 72,000 31,539 44% 31,336 - - - - 203 - - 4 ------equipments 572.00 Nursery maintenance costs 15,000 17,903 119% 17,889 - - - - 14 - - 4 ------Equipment, furniture and computers for 575.00 6,000 - 0% ------4 ------head office 576.00 Nursery Fencing works 34,400 25,491 74% 23,379 - - - - 2,111 - - 4 ------Tissue laboratory renovation's technical 577.00 1,200 - 0% ------4 ------control 578.00 Self rooted (invitro) wallnut plunts 42,500 41,339 97% 41,339 ------4 ------579.00 FA Financial Audit 2013 FY 16,000 9,893 62% 8,236 - - - - 1,657 - - 4 ------580.00 Local advisory 5,000 2,215 44% 2,009 - - - - 206 - - 4 ------

Technical control of Nursery main pipeline, 584.00 2,400 - 0% ------4 ------head unit and pressure tank construction

Technical supervision of office renovation, 585.00 tubewell construction, gate, green 1,000 24,063 2406% 20,138 - - - - 3,925 - - 4 ------shadehouse construction Tissue laboratory design (incl author's 628.00 15,000 - 0% ------4 ------control) 629.00 TBD (To be determined) 24,827 41,579 167% 35,928 - - - - 5,651 - - 4 ------711.00 FA Office Renovation (sqm) 100,000 - 0% ------4 ------712.00 Nursery Shade-House Construction 18,400 - 0% ------4 ------716.00 Stone Fruit grafting activities 14,000 - 0% ------4 ------719.00 TBD (To be determined) 145,900 11,051 8% - - - - - 11,051 - - - 4 ------1.1.2 Establishment of FA Orchards 586,800 113,735 19% 89,489 - - - - 24,247 ------Soil preparation works 2013 selected 42.1 554.00 20,000 14,281 71% 14,281 ------4 ------ha Orchard establishment works, 560.00 guardhouse/toilets construction 2013 67,000 987 1% 987 ------4 ------selected, 42.1 ha Purchase of grafted wallnut seedlings for 15 563.00 82,000 86,061 105% 86,061 ------4 ------ha orchards and nursery Purchase of grafted stone fruit seedlings for 564.00 300,000 329,031 110% 328,964 - - - - 67 - - 4 ------25 ha Purchase of drip irrigation systems for 565.00 130,800 8,261 6% 6,814 - - - - 1,448 - - 4 ------orchards of 43.6 ha 2012 selected Purchase of anti-hail systems for orchards 566.00 99,000 - 0% ------4 ------of 4.5ha Purchase of drip systems for orchards of 567.00 105,250 - 0% ------4 ------42.1ha, 2013 selected Purchase of anti-hail systems for orchards 568.00 360,000 - 0% ------4 ------of 16 ha Orchard management and maintenance 573.00 86,000 34,367 40% 34,367 ------4 ------(irrigation, antipesticides etc.) 581.00 Land mapping and analysis, 10 ha 2,400 16,191 675% 16,191 ------4 ------582.00 Water analysis, 10 points 2,400 - 0% ------4 ------Trading/Marketing expenses (exporting 583.00 90,000 - 0% ------4 ------appricots and fruits) Future Revenue Advance Payment to 630.00 9,000 6,868 76% 6,868 ------4 ------Farmers (40HH) 713.00 Soil Preparation works 2014 selected 10ha 10,000 - 0% ------4 ------

714.00 Training for Staff and Farmers 4,800 - 0% ------4 ------715.00 Marketing Strategy design 5,000 - 0% ------4 ------1.2 Promotion of Standards and Exports ------720.00 Support to Agrorelated Laboratories 30,000 - 0% ------3 ------721.00 Export Promotion 58,600 - 0% ------3 ------722.00 Horticulture Fair Spring 2014 - Germany 78,000 - 0% ------3 ------1.3 Fruit Armenia Overhead cost 229,130 57,370 25% 56,108 6 - - - 1,256 ------1.3.1 Staff costs 120,540 36,992 31% 36,992 ------588.00 Director 18,199 22,041 121% 22,041 ------4 ------589.00 Assistant/Secretary 9,824 11,135 113% 11,135 ------4 ------590.00 Finance Manager 14,470 - 0% ------4 ------591.00 Accountant 12,932 10,316 80% 10,316 ------4 ------592.00 Orchard Manager 14,470 - 0% ------4 ------593.00 Deputy Director / Nursery Manager 16,270 9,037 56% 9,037 ------4 ------594.00 Lawyer 14,470 17,799 123% 17,799 ------4 ------595.00 Procurement Specialist 12,932 14,552 113% 14,552 ------4 ------596.00 Office Manager 11,393 11,626 102% 11,626 ------4 ------597.00 Translator 12,310 14,047 114% 14,047 ------4 ------598.00 Agronomist (Marz) 7,398 7,264 98% 7,264 ------4 ------599.00 Agronomist (Marz) 7,398 7,748 105% 7,748 ------4 ------600.00 Agronomist (Marz) 7,398 7,748 105% 7,748 ------4 ------601.00 Nursery Specialist (plant) 12,310 - 0% ------4 ------602.00 Nursery Specialist (agro) 12,310 14,090 114% 14,090 ------4 ------603.00 Driver 1 6,675 5,825 87% 5,825 ------4 ------604.00 Driver 2 6,675 3,184 48% 3,184 ------4 ------605.00 Bonus programme/incentive scheme 20,000 - 0% ------4 ------717.00 Marketing Manager 14,470 - 0% ------4 ------

21

Description Total expenditure Expenditure by financing source Category Quarter

Reflow Planned for Actual for IFAD Danish Gov. s

ID 2015 2015 % of plan IFAD loan grant OFID loan grant budget Gov. tax Clients /other IFAD loan IFAD grant OFID loan Danish grant I II III IV ------718.00 Logistics Specialist 11,393 - 0% ------4 ------1.3.2 Vehicles 20,000 5,194 26% 4,859 - - - - 335 ------606.00 Vehicles repair and maintenance 8,000 2,341 29% 2,270 - - - - 71 - - 4 ------607.00 Fuel 30,000 11,764 39% 10,017 - - - - 1,747 - - 4 ------609.00 Vehicles Insurance 2,626 4,734 180% 4,734 ------4 ------1.3.3 Staff other costs 32,900 827 3% 827 ------610.00 Business trip costs /International/ 60,000 28,903 48% 28,903 ------4 ------611.00 Business trip costs /Local/ 2,000 375 19% 345 - - - - 29 - - 4 ------612.00 Custodial costs 14,400 416 3% 416 ------4 ------613.00 Office cleaner 2,900 491 17% 491 ------4 ------614.00 IT support (half time) 6,800 6,555 96% 6,555 ------4 ------1.3.4 Stationary and Office Supplies ------615.00 Office Supplies 3,000 1,063 35% 967 - - - - 96 - - 4 ------1.3.5 Telecommunications ------617.00 Land line 1,500 - 0% ------4 ------618.00 Mobile communication 4,800 3,321 69% 2,803 - - - - 518 - - 4 ------619.00 Internet 1,000 1,070 107% 895 - - - - 175 - - 4 ------1.3.6 Other 55,690 14,357 26% 13,430 6 - - - 921 ------Computer, photocopies, network 620.00 2,400 435 18% 427 - - - - 8 - - 4 ------maintenance 621.00 Electricity and water 7,920 8,091 102% 7,115 - - - - 975 - - 4 ------622.00 Bank charges 1,200 940 78% 857 11 33 - 4 36 - - 4 ------623.00 Honoraries and official receptions 3,000 833 28% 833 ------4 ------625.00 Other costs 25,000 9,793 39% 3,930 - - - - 5,864 - - 4 ------2 Infrastructure 15,407,378 3,569,731 23% - - 2,477,499 - 228,969 668,282 194,981 ------2.1 Public Utilities Investments 13,412,437 3,569,731 27% - - 2,477,499 - 228,969 668,282 194,981 ------Natural Gas Supply & Irrigation/Water 2.1.1 13,412,437 3,569,731 27% - - 2,477,499 - 228,969 668,282 194,981 ------Supply Natural gas supply of Tsakhkashen, Apna, Vardenut, Aragats, Hartavan, Shenavan, Kuchak, Kosh, Ujan, Vardenis, Alagiaz and 505.00 568,635 896,337 158% - - 848,277 - 13,798 20,821 13,441 - - - b1 - - - - - Arai communities and construction of mid pressure feeder of Kosh and Ujan communities of Aragatsotn Marz Drinking Water Supply of Haghartsin and Vazashen communities, natural gas supply 506.00 504,040 861,093 171% - - 791,962 - 19,947 29,839 19,345 - - - b1 - - - - - of Voskepar, Baghanis, Voskevan, Koti, Barekamavan, Hovk of Tavush Marz Drinking Water Supply of Haghartsin and 506.01 ------Vazashen communities Natural gas supply of Voskepar, Baghanis, 506.02 Voskevan, Koti, Barekamavan, Hovk of ------Tavush Marz Natural gas Supply for Grigor Lusavorich block of Spitak community and extension of 507.00 35,104 10,909 31% - - 3,901 - 2,040 3,133 1,835 - - - b1 - - - - - former pipeline in Shirakamut community of Lori Marz Natural Gas supply of Khnatsakh, 508.00 Spandaryan, Khoznava and Vaghatur 141,256 99,031 70% - - - - 25,532 50,798 22,700 - - - b1 - - - - - communities of Syunik Marz Natural Gas supply in Artanish community 509.00 52,279 - 0% ------b1 - - - - - of Gegharkunik Marz Lot 1-Drinking water supply of Barekamavan community, natural gas supply of Ptghavan, Deghdzavan, Jujevan, 709.00 598,980 156,180 26% - - - - 58,808 97,372 - - - - b1 - - - - - Debedavan, Aghavnavank, Bagratashen, Khachardzan, Gosh and Ajgedzor communities of Tavush marz Drinking water supply of Barekamavan 709.01 ------community Natural gas supply of Ptghavan, Deghdzavan, Jujevan, Debedavan, 709.02 Aghavnavank, Bagratashen, Khachardzan, ------Gosh and Ajgedzor communities of Tavush marz Lot 2- Drinking water supply of Arteni community, natural gas supply of Sasunik, Aghdzq, Karbi, Ohanavan, Arteni, 802.00 1,225,466 515,925 42% - - - - 122,897 199,374 193,654 - - - b1 - - - - - Aragatsavan communities, and Jalalyan, Poshter and Lusavorich blocks of Aparan city of Aragatsotn marz 802.01 Drinking water supply of Arteni community ------

Natural gas supply of Sasunik, Aghdzq, Karbi, Ohanavan, Arteni, Aragatsavan 802.02 communities, and Jalalyan, Poshter and ------Lusavorich blocks of Aparan city of Aragatsotn marz Lot 3- Rehabilitation of irrigation water network of Dzoragyugh community of 803.00 Gegharkunik marz, natural gas supply of 437,521 157,709 36% - - - - 43,257 71,181 43,271 - - - b1 - - - - - Malishka, Getap, Por, Zaritap and Arpi communities of Vayots Dzor marz Rehabilitation of irrigation water network 803.01 of Dzoragyugh community of Gegharkunik ------marz Natural gas supply of Malishka, Getap, Por, 803.02 Zaritap and Arpi communities of Vayots ------Dzor marz Construction of Mid Pressure Feeders in 804.00 Artanish Community of Gegharkunik Marz 85,673 84,370 98% - - 84,370 ------b1 - - - - - and Khnatsakh Community of Syunik Marz

22

Description Total expenditure Expenditure by financing source Category Quarter

Reflow Planned for Actual for IFAD Danish Gov. s

ID 2015 2015 % of plan IFAD loan grant OFID loan grant budget Gov. tax Clients /other IFAD loan IFAD grant OFID loan Danish grant I II III IV ------Lot 1- Natural gas supply of Voskepar, Baghanis, Voskevan, Koti, Barekamavan and Hovq communities of Tavush marz, 805.00 ------Khnatsakh, Khoznavar and Spandarian communities of Syunik marz, Artanaish community of Gegharkunik marz Lot 2 - Natural gas supply of Tsakhkashen, Apna, Vardenut, Aragats, Hartavan, 806.00 ------b1 - - - - - Shenavan, Kuchak, Kosh, Vardenis and Arai communities of Aragatsotn marz Technical Supervision of Civil Works - 807.00 ------b1 - - - - - Tavush Marz Technical Supervision of Civil Works 808.00 ------b1 - - - - - Aragatsotn marz Technical Supervision of Civil Works (Vayots 809.00 ------Dzor, Syunik and Gegharkunik marzes

Design, Supervision (Tech, Author, 710.00 432,000 279,735 65% - - 128,140 - 108,515 43,080 - - - - b3 - - - - - Expertise, Translation) 2.2 Rural Transportation Inv. 1,994,941 - 0% ------To reimburse the cost FA has accrued for 707.00 the instalation of the water system to field 66,000 - 0% ------edge the RTI subcomponent 708.00 TBD (to be determind) 86,000 - 0% ------851.00 Technical Feasibility Assessment 15,000 - 0% ------1a ------3 Programme Management 760,817 256,581 34% 129,498 - 116,147 - 1,325 9,610 ------3.1 Programme Management 760,817 256,581 34% 129,498 - 116,147 - 1,325 9,610 ------3.1.1 Equipment, Goods and Vehicles 4,863 1,655 34% 1,159 - 459 - - 36 ------631.00 Equipment, Goods and Vehicles 8,884 16,932 191% 13,017 - 898 - - 3,017 - - 2 ------3.1.2 TA, Training and Specialists 123,119 28,124 23% 14,140 - 13,983 ------632.00 Training and Workshops 39,804 1,827 5% 1,827 ------3 ------633.00 Management Services 16,287 33,550 206% 18,583 - 14,786 - - 181 - - 5 - c - - - - - 634.00 Project Financial audit (2013 FY) 27,143 25,986 96% 21,566 - - - - 4,420 - - 3 ------3.1.3 Staff costs 326,679 108,325 33% 54,163 - 54,163 ------635.00 Director 16,028 14,594 91% 7,297 - 7,297 - - - - - 5 - c - - - - - 636.00 Head of Office Management Division 13,700 16,004 117% 8,002 - 8,002 - - - - - 5 - c - - - - - Head of M&E, Programme Coordination & 637.00 13,700 15,096 110% 7,548 - 7,548 - - - - - 5 - c - - - - - Development Division 638.00 Head of Finance Division 13,700 16,038 117% 8,019 - 8,019 - - - - - 5 - c - - - - - 639.00 Chief Accountant 13,700 11,007 80% 5,503 - 5,503 - - - - - 5 - c - - - - - 640.00 Accountant 13,700 13,223 97% 6,612 - 6,612 - - - - - 5 - c - - - - - 643.00 Accountant 13,700 12,575 92% 6,287 - 6,287 - - - - - 5 - c - - - - - 644.00 Head of Procurement Division 13,700 14,559 106% 7,279 - 7,279 - - - - - 5 - c - - - - - 645.00 Procurement Specialist 13,700 14,135 103% 7,067 - 7,067 - - - - - 5 - c - - - - - 646.00 Economist Engineer 13,700 10,481 77% 5,240 - 5,240 - - - - - 5 - c - - - - - 647.00 Head of Construction Supervision Division 13,700 16,119 118% 8,060 - 8,060 - - - - - 5 - c - - - - - 648.00 Design Supervision Engineer 13,700 14,140 103% 7,070 - 7,070 - - - - - 5 - c - - - - - 649.00 Construction Supervision Engineer 1 13,700 14,109 103% 7,055 - 7,055 - - - - - 5 - c - - - - - 650.00 Construction Supervision Engineer 2 13,700 14,568 106% 7,284 - 7,284 - - - - - 5 - c - - - - - 651.00 Construction Supervision Engineer 3 13,700 - 0% ------5 - c - - - - - 652.00 Assistant/Secretary 9,588 6,899 72% 3,450 - 3,450 - - - - - 5 - c - - - - - 653.00 Component Coordination Specialist 13,700 4,102 30% 2,051 - 2,051 - - - - - 5 - c - - - - - 654.00 M&E Analyst 13,700 - 0% ------5 - c - - - - - 655.00 M&E Specialist 13,700 10,334 75% 5,167 - 5,167 - - - - - 5 - c - - - - - 656.00 Office Manager 13,700 2,257 16% 1,129 - 1,129 - - - - - 5 - c - - - - - 657.00 External Relations and Gender Specialist 13,700 13,124 96% 6,562 - 6,562 - - - - - 5 - c - - - - - 658.00 Driver 1 5,028 4,058 81% 2,029 - 2,029 - - - - - 5 - c - - - - - 666.00 Driver 2 5,028 4,374 87% 2,187 - 2,187 - - - - - 5 - c - - - - - 667.00 Driver 3 5,028 4,470 89% 2,235 - 2,235 - - - - - 5 - c - - - - - 669.00 Driver 4 5,028 4,249 85% 2,124 - 2,124 - - - - - 5 - c - - - - - 670.00 Driver 5 5,028 4,043 80% 2,022 - 2,022 - - - - - 5 - c - - - - - 671.00 Driver 6 5,028 4,027 80% 2,013 - 2,013 - - - - - 5 - c - - - - - 672.00 Translator 10,595 8,379 79% 4,190 - 4,190 - - - - - 5 - c - - - - - 673.00 Lawyer 13,700 14,665 107% 7,333 - 7,333 - - - - - 5 - c - - - - - 3.1.4 Ongoing costs 131,601 45,423 35% 18,693 - 18,693 - - 8,036 ------679.00 Operating and Banking Charges 2,546 3,608 142% 1,791 - 1,791 - - 26 - - 5 - c - - - - - 680.00 Energetic Services 7,130 4,651 65% 1,932 - 1,932 - - 787 - - 5 - c - - - - - 681.00 Communal Services 370 1,618 437% 716 - 716 - - 187 - - 5 - c - - - - - 682.00 Telecommunication Services 25,668 16,505 64% 6,933 - 6,933 - - 2,639 - - 5 - c - - - - - 683.00 Insurance Services 16,132 7,824 48% 3,912 - 3,912 - - - - - 5 - c - - - - - 684.00 Office and other property Rent 76,248 72,579 95% 30,076 - 30,076 - - 12,427 - - 5 - c - - - - - 3.1.5 Business trip costs 43,232 9,986 23% 4,993 - 4,993 ------685.00 Local Business Trips 22,800 3,635 16% 1,817 - 1,817 - - - - - 5 - c - - - - - 686.00 International Business Trips 37,072 22,528 61% 11,350 - 11,178 - - - - - 5 - c - - - - - 3.1.6 Other contracting services 48,002 23,692 49% 11,661 - 11,661 - - 370 ------687.00 Administrative Services 5,429 2,028 37% 1,014 - 1,014 - - - - - 5 - c - - - - - 688.00 Computer Services 34,795 10,689 31% 5,078 - 5,078 - - 532 - - 5 - c - - - - - 689.00 Information Services 13,423 1,029 8% 480 - 480 - - 69 - - 5 - c - - - - - 690.00 Representative costs 13,128 35,744 272% 17,691 - 17,691 - - 362 - - 5 - c - - - - - 3.1.7 Ongoing Repair and Maintenance 43,152 15,327 36% 7,261 - 7,261 - - 805 ------691.00 Office repair and maintenance 7,403 6,161 83% 3,078 - 3,078 - - 5 - - 5 - c - - - - - Vehicles & Equipment Repair and 692.00 27,814 30,563 110% 14,304 - 13,802 - - 2,458 - - 5 - c - - - - - Maintenance 3.1.8 Substances 36,361 18,668 51% 15,552 - 3,058 - - 58 ------693.00 Office materials and supplies 7,683 7,632 99% 3,449 - 3,160 - - 1,023 - - 5 - c - - - - - 694.00 Training and Educational Items 593 13,494 2275% 11,430 - 2,064 - - - - - 5 - c - - - - - 695.00 Fuel and Oil 34,006 31,355 92% 13,297 - 13,297 - - 4,762 - - 5 - c - - - - - 696.00 Public household and food items 1,480 642 43% 266 - 266 - - 109 - - 5 - c - - - - - 3.1.9 Other 3,808 5,383 141% 1,877 - 1,877 - 1,325 304 ------Taxes and other mandatory social 697.00 1,234 983 80% 116 - 116 - 638 114 ------payments

23

Description Total expenditure Expenditure by financing source Category Quarter

Reflow Planned for Actual for IFAD Danish Gov. s

ID 2015 2015 % of plan IFAD loan grant OFID loan grant budget Gov. tax Clients /other IFAD loan IFAD grant OFID loan Danish grant I II III IV ------698.00 Other costs 1,728 5,510 319% 2,024 - 2,024 - 614 849 - - 5 - c - - - - - 800.00 TBD (to be determind) 102,448 13,264 13% 11,048 - - - - 2,216 ------4 Rural Finance 1,235,097 26,027 2% - - - 21,079 - 4,949 ------4.1 Economic Modeling and Feasibility 185,097 26,027 14% - - - 21,079 - 4,949 ------699.00 Economic Modeling and Feasibility 190,000 33,701 18% - - - 27,516 - 6,186 - - - - - I - - - - 4.2 Credit Lines 1,000,000 - 0% ------700.00 Credit Lines RFF 1,781,300 - 0% ------II - - - - 4.3 Avisory Support 50,000 - 0% ------Information dissemination/brochures, 723.00 92,600 - 0% ------leaflets etc./ 724.00 Performance Monitoring 50,000 - 0% ------725.00 Training to Farmers receiving loans 50,000 - 0% ------709.12 0 188,736 - 0% ------b1 - - - - - 18,300,722 4,044,206 22% 293,233 6 2,593,646 21,079 230,294 710,967 194,981 -

24

Annex II – Actual expenditure and balance by projects and categories, 2014 Actual balance by category 2015 2015 Applicable exchange rate (SDR/USD) 1.5000000 • as at • INSERT DATE Planned expenditure and Outgoing Incoming Balance reallocations Balance Expenditure Cum. disb. IFAD loan Outstanding Outstanding not yet Outstanding Outstanding and Allocated balance on balance on claimed/for balance on Expenditure Reallocations balance at advance at disb. disb. eseen for PY expenditure PY end PY start 2015 No Name SDR SDR SDR USD USD USD USD USD USD 1a Civil Works 730,000 730,000 1,095,000 1,095,000 0 1,095,000 1b Design and Supervision 65,000 65,000 97,500 97,500 0 97,500 2 Vehicles, Equipment and 110,000 110,000 165,000 165,000 1,159 163,841 Goods 3 Training, Technical Assistance 370,000 370,000 555,000 555,000 7,989 547,011 and Specialist services 4 Fruit Armenia financing 6,720,000 6,720,000 10,080,000 10,080,000 144,917 9,935,083 5 Recurrent Costs 755,000 755,000 1,132,500 1,132,500 120,350 1,012,150 Advance and adj. for exch. rate 1,964,915 -1,964,915 -3,000,000 52,627 variation Total 8,750,000 1,032,186 7,717,814 11,576,721 0 11,576,721 274,415 0 11,354,933 Applicable exchange rate (SDR/USD) 1.5000000 • as at • INSERT DATE Planned expenditure and Outgoing Incoming Balance reallocations Balance

Cum. disb. Expenditure IFAD grant Outstanding Outstanding Outstanding Outstanding and not yet Allocated balance on balance on balance on Expenditure Reallocations balance at advance at claimed/for disb. disb. expenditure PY end PY start eseen for PY

No Name SDR SDR SDR USD USD USD USD USD USD

Training, Technical Assistance 4 330,000 0 330,000 495,000 0 495,000 0 0 495,000 and Specialist services

Advance and adj. for exch. rate 0 84,998 -84,998 -130,835 3,338 ### variation Total 330,000 0 330,000 495,000 0 495,000 0 0 495,000

Planned expenditure and Outgoing Incoming Balance reallocations Balance

Cum. disb. Expenditure OFID loan Outstanding Outstanding Outstanding and not yet Allocated balance on balance on Expenditure Reallocations balance at advance at claimed/for disb. expenditure PY end PY start eseen for PY

No Name USD USD USD USD USD USD USD USD b1 Public Utilities Investments 17,484,000 0 17,484,000 0 17,484,000 0 0 17,484,000 b3 Design and Supervision 1,316,000 0 1,316,000 0 1,316,000 0 0 1,316,000 c Project Management 1,200,000 0 1,200,000 0 1,200,000 107,856 0 1,092,144 Total 20,000,000 0 20,000,000 0 20,000,000 107,856 0 19,892,144 ###

Planned expenditure and Outgoing Incoming Balance reallocations Balance

Cum. disb. Expenditure Danish grant Outstanding Outstanding Outstanding and not yet Allocated balance on balance on Expenditure Reallocations balance at advance at claimed/for disb. expenditure PY end PY start eseen for PY

No Name USD USD USD USD USD USD USD USD I Economic Modelling and Fisibility 196,429 0 196,429 0 196,429 0 0 196,429 II Credit Lines 3,637,500 0 3,637,500 0 3,637,500 0 0 3,637,500 III Advisory Support 366,071 0 366,071 0 366,071 0 0 366,071 Total 4,200,000 0 4,200,000 0 4,200,000 0 0 4,200,000 ###

25

Annex III – Results and Impacts Management System indicators

Sum of Annual Cumulative RIMS report, year 2015 actuals of % of previous Unit Plan Actual % of annual Appraisal Actual appraisal years Total outreach

People receiving Project services Total 46,590 288 1% 61,231 3,755 6% 3,467 People receiving Project services Male 23,178 143 1% 27,554 1,885 7% 1,742 People receiving Project services Female 23,413 145 1% 33,677 1,871 6% 1,726 Component 1 Support to Fruits and Nuts Sector People receiving Project services Total 288 288 100% 2,665 531 20% 243 People receiving Project services Male 143 143 100% 1,898 281 15% 138 People receiving Project services Female 145 145 100% 767 251 33% 106 Component 1.1 Fruit Armenia Operations People receiving Project services Total 288 288 100% 2,665 531 20% 243 People receiving Project services Male 143 143 100% 1,898 281 15% 138 People receiving Project services Female 145 145 100% 767 251 33% 106 *Increase in exports of fruits and nuts by PY5 (%) # - - 0% 10 - 0% - *Commercially oriented farmers established contractual arrangement by PY5 (%) # - - 0% 5 - 0% - *Full time and seasonal jobs created by PY5 # - - 0% 700 - 0% - *Full time and seasonal jobs created by PY5 HH - - 0% 175 - 0% - *Full time and seasonal jobs created by PY5 Male - - 0% 630 - 0% - *Full time and seasonal jobs created by PY5 Female - - 0% 70 - 0% - *Additional rural poor smallholders take up at least one of improved technologies by PY5 # - - 0% 300 - 0% - *Additional rural poor smallholders take up at least one of improved technologies by PY5 HH - - 0% 75 - 0% - *Additional rural poor smallholders take up at least one of improved technologies by PY5 Male - - 0% 270 - 0% - *Additional rural poor smallholders take up at least one of improved technologies by PY5 Female - - 0% 30 - 0% - *Increase in the value of fruit/nut orchard land (%) # - - 0% 500 - 0% - *Reduction in work days lost (%) # - - 0% 10 - 0% - *Modern orchards established HH 72 72 100% - 107 0% 35 *Modern orchards established Male 143 143 100% - 156 0% 13 *Modern orchards established Female 145 145 100% - 159 0% 14 *Modern orchards established ha 32 34 107% 306 85 28% 51 *People trained in crop production and technologies # 30 - 0% 150 26 17% 26 *People trained in crop production and technologies Male - - 0% 135 24 18% 24 *People trained in crop production and technologies Female - - 0% 15 2 13% 2 *Crop production groups formed/strengthened (cluster) # - - 0% 10 4 40% 4 *People trained in post-production, processing and marketing # - - 0% 30 - 0% - *People trained in post-production, processing and marketing Male - - 0% 27 - 0% - *People trained in post-production, processing and marketing Female - - 0% 3 - 0% - *Processing, marketing or storage facilities constructed/rehabilitated # - - 0% 3 - 0% - *Non-contracted farmers and nursery people trained # - - 0% 35 8 23% 8 *Non-contracted farmers and nursery people trained HH - - 0% - 8 0% 8 *Non-contracted farmers and nursery people trained Male - - 0% 31 6 19% 6 *Non-contracted farmers and nursery people trained Female - - 0% 4 2 50% 2 *Nurseries procure stocks from FA by PY5 # - - 0% 7 - 0% - *FA establishes contract with poor smallholders by PY5 # - - 0% 200 26 13% 26 *FA establishes contract with poor smallholders by PY5 HH - - 0% - 26 0% 26 *FA establishes contract with poor smallholders by PY5 Male - - 0% 180 32 18% 32 *FA establishes contract with poor smallholders by PY5 Female - - 0% 20 25 125% 25 *Increase of fruit/nut production meeting IQS (international quality standards) by PY5 (%) # - - 0% 40 - 0% - *Certification facilities financially sustainable by PY5 # - - 0% 2 - 0% - *Production area with improved road access ha - - 0% 2,000 - 0% - *Reduction in post harvest losses after road construction(%) # - - 0% 20 - 0% - Other productive infrastructure constructed/rehabilitated ha - - 0% - 5 0% 5

26

Sum of Annual Cumulative RIMS report, year 2015 actuals of % of previous Unit Plan Actual % of annual Appraisal Actual appraisal years Component 2 Infrastructure People receiving Project services Total 48,120 - 0% 339,750 3,224 1% 3,224 People receiving Project services Male 23,939 - 0% 179,975 1,604 1% 1,604 People receiving Project services Female 24,181 - 0% 159,775 1,620 1% 1,620 Component 2.1 Public Utilities Investments People receiving Project services Total 48,120 - 0% 299,250 3,224 1% 3,224 People receiving Project services Male 23,939 - 0% 157,925 1,604 1% 1,604 People receiving Project services Female 24,181 - 0% 141,325 1,620 1% 1,620 *Other infrastructure/facilities constructed and/or rehabilitated(gas systems, communitites connected) # 46 - 0% 95 17 18% 17 *Other infrastructure/facilities constructed and/or rehabilitated(gas systems, communitites connected) HH 9,562 - 0% 25,000 186 1% 186 *Other infrastructure/facilities constructed and/or rehabilitated(gas systems, communitites connected) Male 19,028 - 0% 55,000 370 1% 370 *Other infrastructure/facilities constructed and/or rehabilitated(gas systems, communitites connected) Female 19,220 - 0% 45,000 374 1% 374 *Other infrastructure/facilities constructed and/or rehabilitated(gas systems, communitites connected) km 289 - 0% - 267 0% 267 *Reduced usage of wood for heating/cooking by HH (cubm) # - - 0% 100,000 - 0% -

*Drinking water systems constructed/rehabilitated # 10 - 0% 35 2 6% 2

*Drinking water systems constructed/rehabilitated HH 838 - 0% 8,250 620 8% 620

*Drinking water systems constructed/rehabilitated Male 1,667 - 0% 19,800 1,234 6% 1,234

*Drinking water systems constructed/rehabilitated Female 1,685 - 0% 13,200 1,246 9% 1,246

*Drinking water systems constructed/rehabilitated km 92 - 0% - 17 0% 17 Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) # 3 - 0% - - 0% - Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) HH 1,630 - 0% - - 0% - Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) Male 3,244 - 0% - - 0% - Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) Female 3,276 - 0% - - 0% - Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) ha 560 - 0% - - 0% - Component 2.2 Rural Transportation Inv. People receiving Project services Total - - 0% 40,500 - 0% - People receiving Project services Male - - 0% 22,050 - 0% - People receiving Project services Female - - 0% 18,450 - 0% - *Roads constructed (villages connected to markets by feeder road) # - - 0% 15 - 0% - *Roads constructed (villages connected to markets by feeder road) HH - - 0% 4,500 - 0% - *Roads constructed (villages connected to markets by feeder road) Male - - 0% 10,800 - 0% - *Roads constructed (villages connected to markets by feeder road) Female - - 0% 7,200 - 0% - *Roads constructed (villages connected to markets by feeder road) km - - 0% 24 - 0% - *Other infrastructure/facilities constructed and/or rehabilitated(irrigation schemes) ha - - 0% - 21 0% 21 Component 4 Rural Finance People receiving Project services Total - - 0% - - 0% - People receiving Project services Male - - 0% - - 0% - People receiving Project services Female - - 0% - - 0% - Component 4.1 Economic Modeling and Feasibility People receiving Project services Total - - 0% - - 0% - People receiving Project services Male - - 0% - - 0% - People receiving Project services Female - - 0% - - 0% - 27

Annex IV – RACP actual expenditure by financing sources, annual and cumulative IFAD Loan Appraisal vs exp. and projections, IFAD loan, all components; for 2015 the table represents exp. Appraisal vs exp. and projections, IFAD loan, all components; for 2015 the table represents exp. by 30/06/2015 by 30/06/2015; cumulative 3,992 13,930 13,657 4,000 3,774 14,000

3,448 3,500 12,000 11,213

3,000 10,000 2,444 2,500 Appraisal 8,000 7,221 Apprais 2,000 al

Actual and

USD USD '000 USD USD '000 projected 6,000 1,500 1,294 3,774 4,000 3,327 3,034 1,000 788 795 1,740 2,000 500 272 293 944 157 157 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 IFAD Grant Appraisal vs exp. and projections, IFAD grant, all components; for 2015 the table represents exp. Appraisal vs exp. and projections, IFAD grant, all components; for 2015 the table represents exp. by 30/06/2015 by 30/06/2015; cumulative 158 160 450 416 416

140 400

119 119 119 350 120 297 300 100 Appraisal 250 232 232 232 Apprais 74 80 al

Actual and USD USD '000 USD USD '000 200 178 59 projected 60 150

40 100 74 59 20 50 - 0 - 0 - - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 OFID Loan Appraisal vs exp. and projections, OFID loan, all components; for 2015 the table represents exp. Appraisal vs exp. and projections, OFID loan, all components; for 2015 the table represents exp. by 30/06/2015 by 30/06/2015; cumulative 4,866 5,000 20,000 4,567 4,579 4,583 18,155 18,364 4,500 18,000 4,143

4,000 16,000 14,013 3,500 14,000 3,162 12,605

3,000 12,000 Appraisal 2,594 10,011 9,433 Apprais 2,500 10,000 al

2,134 Actual and USD USD '000 USD USD '000 7,877 2,000 projected 8,000

1,500 6,000 4,567

1,000 4,000 3,295

500 209 2,000 133 133 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Danida Grant Appraisal vs exp. and projections, Danish grant, all components; for 2015 the table represents Appraisal vs exp. and projections, Danish grant, all components; for 2015 the table represents exp. by 30/06/2015 exp. by 30/06/2015; cumulative 4,500 2,500 4,196

2,133 4,000 2,063

2,000 3,500

3,000 1,500 Appraisal 2,500 Apprais 2,063 al

Actual and USD USD '000 USD USD '000 2,000 1,000 projected 1,500

1,000 500

500 ------28 21 ------28 49 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 State Budget

28

Appraisal vs exp. and projections, Gov. budget, all components; for 2015 the table represents Appraisal vs exp. and projections, Gov. budget, all components; for 2015 the table represents exp. by 30/06/2015 exp. by 30/06/2015; cumulative 2,500 8,000 7,100 7,100 7,000 2,022 2,000 6,000 1,722 1,722 5,465 1,634 5,000 1,500 Appraisal 3,744 Apprais 4,000 al

Actual and

USD USD '000 USD USD '000 1,000 projected 858 3,000

2,022 1,777 2,000 1,547 500 396 1,151 292 230 1,000 292 - - - - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Taxes Appraisal vs exp. and projections, Gov. tax, all components; for 2015 the table represents exp. by Appraisal vs exp. and projections, Gov. tax, all components; for 2015 the table represents exp. by 30/06/2015 30/06/2015; cumulative 1,400 3,500 1,284 3,193

1,200 3,000

2,482 2,480 2,414 1,000 2,500

2,055 741 Appraisal 2,000 1,880 800 711 676 Apprais 638 al

603 Actual and USD USD '000 USD USD '000 567 1,379 600 projected 1,500

400 358 1,000 741 596

200 500 67 29 29 - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Beneficiaries Appraisal vs exp. and projections, Clients, all components; for 2015 the table represents exp. by Appraisal vs exp. and projections, Clients, all components; for 2015 the table represents exp. by 30/06/2015 30/06/2015; cumulative 1,400 6,000 1,296 1,296 1,296 1,296 5,185 5,185 1,200 5,000

1,000 3,889 4,000

800 Appraisal 679 Apprais 3,000 2,592 al

Actual and

USD USD '000 USD USD '000 600 projected

2,000 400 1,390 294 1,296 1,195 221 900 195 1,000 200 221 - - - - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

29

Annex VI – Summary of key agreed actions with timeframes, IFAD Mid-Term Review Mission

Component 1

Agreed action Responsibility Agreed date Progress/ Comments Prepare a strategic plan on the future of FA until June 2016 (completion Shareholder/Board 15 March The FA has developed the exit strategy plan of the IFAD Programme) and beyond, including options for and FA 2015 for future activities up until June 2016, privatisation, closing down of operations, strengthening the FA which includes organizational matters and management etc. the issues of improving FA’s management Secure bridge financing to cover the projected negative cash flow Shareholder/Board 15 March Implementation of this clause depends on between Programme completion and breakeven point. and FA 2015 corresponding decision of the government on the exit strategy Identify outsourcing opportunities for orchard management, harvesting, FA/Board 15 March The issues of orchard management, post-harvesting operations and marketing through cooperation with 2015 harvesting, harvest marketing and private sector. collaboration with the private sector are presented in the exit strategy plan, which has been submitted to the GoA and the Shareholder. Prepare a comprehensive and realistic business plan (including update FA/Board 15 April Business Plan has been developed and of the existing financial plan) for operations of FA until 2028. 2015 furnished to IFAD Prepare individual exit strategies discussing them in detail with the FA/Board Starting from The exit strategy plan has been submitted to contracted farmers January 15 the Shareholder and GoA, which is now under consideration

Sub-component 1.2. Promotion of Export and Standards

Agreed action Responsibility Agreed date Progress/ Comments Cancel activities under this sub-component in connection with revision PIU/IFAD 15 January 2015 The Financing Agreement is under of the Financing Agreement. amendment

Component 2. Rural Infrastructure Agreed action Responsibility Agreed date Progress / Comments Collection of complete formal investment proposals from 12 PIU/Communities 15 December Completed communities. 2014

30

Procurement of 2 engineering consultancy works PIU/Consultants 15 December Completed 2014 Shortlist of VCI investments scheduled for implementation in 2015 PIU/PSC 15 January Completed (check the date approved by PSC. 2015 of endorsement from the lawyers) Signing of contract for the detailed design of VCI investments. PIU/Designers 15 February Completed 2015 Baseline studies / needs assessment for selected VCI investments Service Providers 1 June 2015 Completed (Jinj LLC) Signing of contract for construction works of VCI investments PIU/Contractors 1 June 2015 The designs are under signed. expertise Recruitment of Planning Engineer. PIU 1 January 2015 Completed Identification of VCI investments for implementation in 2016. PIU 30 August In progress 2015 Completed design of VCI investments for implementation in 2016 PIU/Designers 28 February In progress 2016

Credit and Technical Assistance under Danish grant co-financing Agreed action Responsibility Agreed date Progress / Comments IFAD develop a concept note to present to the Danish representatives IFAD 19 December In progress for revision 2014

Programme implementation progress

31

Agreed action Responsibility Agreed date Progress / Comments Send the draft AWPB to IFAD with realistic planning targets, Completed disaggregated between annual and cumulative. PIU/ FA 31 December 2014 CC to respect the principles of the public private partnership In progress between RFF and the PFIs. CC Immediate Revise the TORs of the temporary M&E officer to associate Completed M&E officer. Retender the position upon entry into force of the Immediate; entry into IRFSP. PIU force of IRFSP Second the loan officer from RFF to PIU to strengthen the PIU’s Completed M&E. PIU/RFF 20 December 2015 Resume normal M&E functions including updating of database, M&E officer; associate Immediate Completed Planner, monitoring of second level indicators and impact. M&E officer To sign contract with service providers for detailed baseline PIU Immediate Completed evaluation, paying specific attention to assets and income levels of the direct beneficiaries in 2015 first lot of investments for irrigation distribution networks

Fiduciary aspects Agreed action Responsibility Agreed date Progress/Comments For all current and coming FY audits, the auditors should audit all PFS Completed provided by project. PIU/KPMG/auditors Early FY 2015 Ensure that IAD recommendations are addressed prior to the start of the PIU/Internal FY 2014 and Completed external audit. Auditors subsequent years Urgently send confirmation communication to the Treasury to close the Completed Fruit and Nuts Sector Programme account, No. 900000917022, which carries a minimal balance. PIU Immediately Ensure that the training needs of FM staff are planned in advance and In progress adequately budgeted into the AWPB. PIU Immediately Upon hiring of the Completed Link the HSBC online banking function (HSBC Net) with 1-C so that the finance manager payment function can be integrated with accounting. Fruit Armenia (FA) and accountant Establish a firm target date for the completion of automatic generation of In progress WAs and the budget control reporting feature within ArmSoft. PIU Early FY 2015 The accounting consultant hired to replace the former accountant should be Completed present in the FA office on a daily basis. FA Immediate Hire a finance manager/Deputy Director as soon as possible to improve Completed 17.06.15 internal control and stabilize the FM function. FA As soon as possible Utilize other methods than tendering in order to find suitable candidates for FA Immediate Completed 32 the post of finance manager; job market research by the PIU and FA needs to be undertaken. FA has applied to IFAD for inviting the specialist to deliver Hire an external consultant to provide hands-on training and backstopping training locally. No to the FA Procurement Officer. FA As soon as possible response yet received FA to open one more USD account in a commercial bank for receiving Before 31 Completed USD 1.5 grant from the Government FA December, 2014 Till the FA finance manager is recruited the finance manager and PIU Immediate FA financial accountant provide half-time support. manager has been recruited. Support is provided, if needed Hire an extra accountant in view of the workload to be faced by the PIU Before the start of In progress upon the start of IRFSP by early next year. PIU the IRFSP The audit contract to be signed with the new auditors for the FY 2015 audit Beginning of FY Completed to include the Asset Register in its ToRs PIU 2015 Beginning of FY Completed KPMG to be excluded from bidding for the new PIU audit contract. PIU 2015 PIU and Fruit Armenia to urgently implement steps to execute activities In progress under Rural Infrastructure category. PIU/FA Immediate Before Completed All pending and in-progress recommendations to be completed before the commencement of start of the FY 2014 external audit. PIU/FA FY 2014 audit

Procurement

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Agreed action Responsibility Agreed date Progress/Comments The procurement plan to be constantly updated to contain the actual information for each Procurement Officers Continuously Completed tender process. Use the Register of Contracts as management tool and update it to contain information on the FA Procurement Continuously Completed paid and remaining balance against each signed contract. Specialist

Ensure that 'Planner' is updated regularly with procurement progress data and contract Project Management Immediate and Completed payment data. continuously Review integration of Procurement Plan and data with 'Planner' and revise 'Planner' reports, IFAD and RACP 31 January 2015 Completed if necessary, to add required columns and data fields. Upon revision of the programme, the teams AWPB and PP inputs in the Planner are to be updated accordingly. Provide training to RACP staff in procurement processes, with a focus on the procurement Project Management Immediate Completed, with under IFI financed projects. continuous attention Make a clear distinction between the roles of the Bid Opening Committee and the Evaluation Procurement Officers Immediate and Completed Committee – different composition, TORs; and clarify the information to be shared at the bid continuously opening in line with Module K5 of IFAD Procurement Handbook. Closely follow IFAD procurement policy, including procurement guidelines and handbook. Procurement Officers Immediate and Completed continuously Encourage and facilitate consultation and exchange between the FA Procurement Staff and Project Management Immediate and Completed, with the Head of Procurement Division in the PIU on best practices in procurement and continuously continuous attention application of IFAD procurement regime (technical). Review and clarify the application of thresholds for obtaining the IFAD 'No Objection' IFAD CPM Immediate and Completed (reference to the Letter to the Borrower). continuously Avoid procurement of goods, works or services (including hiring of personnel) without Project Director(s) Immediate and Accepted obtaining IFAD 'No Objection'. and Pr.Off. continuously Ensure consistency between evaluation criteria mentioned in bidding documents and applied FA Immediate and Completed in the evaluation process. continuously Include the conduct of new tender processes for the 2015 audit entity in the 2015 Project Management 15 December 2014 Completed Procurement Plans.

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