IMF Completes Third Review Under Stand-By Arrangement for Armenia and Approves US$73.6 Million Disbursement

Press Release No. 10/123
March 29, 2010

The Executive Board of the International Monetary Fund (IMF) today completed the third review of Armenia’s economic performance under a program supported by a Stand-By Arrangement (SBA). The decision enables the immediate release of an amount equivalent to SDR 48.485 million (about US$73.6 million), bringing total disbursements so far an amount equivalent to SDR 350.425 million (about US$532.2 million).

They Executive Board also approved a request for a waiver of nonobservance of the end-December 2009 quantitative performance criterion on the net domestic assets of the Central Bank of Armenia (CBA).

The 28-month SBA was approved for an amount equivalent to a total of SDR 368.0 million (about US$558.9 million) on March 6, 2009 (see Press Release No. 09/68), with a total amount of access augmented to an amount equivalent to SDR 533.6 million (about US$810.4 million) on June 22, 2009 (see Press Release No. 09/228).

Following the Executive Board's discussion on Armenia, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:

“Armenia’s performance under its Stand-By Arrangement with the Fund has been strong, and the economic recession appears to have bottomed out, aided by supportive monetary and fiscal policies. The challenge remains to support the fragile recovery, address external vulnerabilities, and advance a credible fiscal consolidation plan over the medium term.

“Fiscal policy aims to continue to support the recovery, while gradually starting fiscal consolidation in 2010. Social spending will be protected. The authorities are committed to make good progress on the reforms in tax policy and administration, as well as on public expenditure and debt management.

“Monetary policy aims to move from an accommodative to a more neutral stance, in order to head off potential inflation pressures. The authorities are committed to a flexible exchange rate regime, and aim to strengthen the monetary transmission mechanism to enhance the effectiveness of monetary instruments, as well as improve the central bank’s communication strategy.

“The financial sector remains sound and well capitalized, and the authorities have strengthened their crisis preparedness and contingency planning frameworks. Further reforms will be important to ensure continued resilience to risks.

“The authorities are committed to pursue broad-based structural reforms to enhance productive capacity and promote long-term growth through an open trade regime, an improved business environment, better governance, and increased market competition in key sectors of the economy,” Mr. Portugal said.



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