IMF To Provide USD 52 Million To Armenia Within EFF/ECF Programs


May 19, 2010 – 18:13 AMT 13:13 GMT

An International Monetary Fund (IMF) mission, led by Mr. Mark Lewis
visited Yerevan during May 6-19. At the end of the mission, Mr. Lewis
issued the following statement:

"The mission reached a staff level agreement with the authorities on
a program supported by arrangements under the Extended Fund Faculty
(EFF) and the Extended Credit Facility (ECF). The staff level agreement
is subject to approval by IMF management and the executive board. A
discussion of the program request at the executive boards is planned
for late June. Access under the program would total USD 392 million,
covering the period through June 2013. Board approval of the program
would enable Armenia to draw about USD 52 million.

While economic conditions remain difficult, the Armenian economy is
gradually recovering. Growth is expected to rebound in 2010, external
inflows are picking up and public finances have improved. Inflation
has remained high due to various supply shocks, but should come down
gradually over the course of 2010.

Nevertheless while the crisis has passed, important medium term
challenges have emerged: boosting growth while reducing poverty,
reversing the debt build-up and maintaining financial stability.

In support of these objectives, the authorities have committed to
a strong set of macroeconomic policies under the proposed EFF/ECF
program. Fiscal policy will continue to support economic activity,
but as the recovery takes hold, budget deficits will gradually fall
to keep public debt on a sustainable path. The authorities intend to
widen the tax base through improvements in the tax administration. The
will also further improve the targeting and efficiency in spending, and
taking further steps to protect the poor by enhancing the social safety
net. Maintaining low inflation will continue to be a key objective
of monetary policy. With supply pressures falling back during the
course of the year, inflation will likely continue to fall as well."

"On structural reforms, the program includes a strong set of tax
administration reforms aimed at boosting taxpayer rights, while
ultimately contributing to sound public finances and improvement of the
business environment. Regarding the financial sector, the Armenian
banking system has proven its resilience during the crisis. The
authorities intend to continue promoting financial intermediation to
support economic activity, strengthen the balance of payments, and lead
to continued progress in poverty reduction," the statement concluded.