Press Release: IMF Executive Board Completes Third Review Under EFF/ECF Arrangement for Armenia and Approves US$56.1 Million Disbursement

December 12, 2011

Press Release No. 11/461
December 12, 2011

The Executive Board of the International Monetary Fund (IMF) has completed its third review of Armenia’s economic performance under a program supported by Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements.1 The decision enables the authorities to draw an additional SDR 36.2 million (about US$56.1 million), bringing total disbursements under the arrangements to SDR 144.8 million (about US$224.3 million). The three-year SDR 266.8 million (about US$413.4 million) EFF and ECF arrangement with Armenia was approved by the IMF’s Executive Board on June 28, 2010 (see Press Release No. 10/263).

In concluding the review, the Board approved a waiver for non-observance of the end-June 2011 performance criterion on the Central Bank of Armenia’s net domestic assets (NDA), modification of end-December 2011 performance criteria for net international reserves and NDA, and revision of the NDA performance criterion to include a symmetrical adjustor on external financing.

Following the Executive Board's discussion on Armenia, Ms. Nemat Shafik, Deputy Managing Director, stated:

“The Armenian authorities should be commended for continued implementation of sound policies under the Fund-supported program, which have helped underpin the moderation of inflation this year and the continuing post-crisis recovery.

“Fiscal policies have been prudent, with the budget deficit reduced significantly again in 2011, and further consolidation planned for 2012 and beyond. This should help ensure fiscal and debt sustainability and reduce vulnerabilities. The 2012 tax package is welcome, as it will ease the adjustment burden on spending. Further measures are expected in the forthcoming tax strategy paper.

“Monetary policy helped to mitigate inflationary pressures, and more active liquidity management has kept market rates more in line with the policy rate. Further efforts are needed, however, to reduce volatility. While private inflows have continued and banking indicators remain strong, ongoing efforts to improve banking sector monitoring and resilience are welcome.

“Structural reforms will help strengthen growth and contribute to external adjustment. Broad-based reforms should aim at enhancing the business environment and promoting competitiveness, greater productivity, and higher exports. While progress is being made, a decisive breakthrough is needed to reduce regulation, improve transparency and evenhandedness, and promote domestic competition.

“Armenia faces increasing downside risks from the global environment, which may exacerbate its existing vulnerabilities. While the ongoing fiscal adjustment and higher reserves targets have helped strengthen buffers, the elevated post-crisis public debt burden now limits policy space. Timely and prudent policy responses will be needed in the period ahead, involving greater exchange rate flexibility and steadfast progress to strengthen the business environment and increase competitiveness.”

1 The ECF replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. ( The Fund reviews the level of interest rates for all concessional facilities every two years.


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