IMF AGAIN EXPRESSES HIGH OPINION ABOUT ARMENIA’S ECONOMIC STATE
Noyan Tapan
Nov 27 2007
YEREVAN, NOVEMBER 27, NOYAN TAPAN. The Executive Board of the
International Monetary Fund (IMF) has completed the fifth review of
Armenia’s economic performance under the three-year Poverty Reduction
and Growth Facility (PRGF) arrangement. According to a press release
of the IMF, the Executive Board also approved a request for modifying
the end-December 2007 structural performance criterion on the tax
filing process. The completion of the review enables the release of
an amount equivalent to SDR 3.28 million (about US.2 million) under
the arrangement, bringing the total amount drawn under the arrangement
to an amount equivalent to SDR 19.68 million (about US.4 million).
The PRGF is the IMF’s concessional facility for low-income
countries. PRGF loans carry an annual interest rate of 0.5 percent
and are repayable over 10 years with a 5.5-year grace period on
principal payments.
Following the Executive Board’s discussion on Armenia, Mr. Murilo
Portugal, Deputy Managing Director and Acting Chair, stated:
"Armenia continues to benefit from a double-digit rate of growth,
moderate inflation, a low fiscal deficit, and a comfortable reserves
position.
Moreover, good progress has been made in reducing poverty. Strong
remittance inflows have dampened the impact of rapidly rising imports
on the current account deficit. The medium-term outlook is positive,
with a favorable outlook for investment."
"Sound fiscal and monetary policies will remain key to macroeconomic
stability and external competitiveness, against the background of
large-scale foreign exchange inflows and rising inflationary risks. The
Central Bank of Armenia is committed to tightening monetary policy to
keep inflation low, while maintaining a flexible exchange rate regime."
"Emerging expenditure pressures associated with pension reform and
a potential hike in gas import prices create medium-term fiscal
risks, calling for improved revenue mobilization and expenditure
prioritization. Increasing the tax-to-GDP ratio in a transparent and
nondiscretionary manner will be particularly important, to provide
resources for the country’s infrastructure needs and efforts to reduce
poverty further."
"The authorities intend to press ahead with their structural reform
agenda to remove remaining bottlenecks to broad-based growth. Policies
aimed at boosting domestic competition and productivity are
essential to improve external competitiveness. The tax administration
modernization program will contribute to reducing tax evasion and
strengthening the business environment," Mr. Portugal said.