IMF Executive Board Completes Fourth Review Under EFF/ECF Arrangement for Armenia and Approves US$50.7 Million DisbursementPress Release No. 12/225
June 15, 2012
The Executive Board of the International Monetary Fund (IMF) today completed its fourth review of Armenia’s economic performance under a program supported by Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements. The decision enables the authorities to draw an additional SDR 33.5 million (about US$50.7 million), bringing total disbursements under the arrangements to SDR 178.3 million (US$269.8 million). The three-year SDR 266.8 million (US$403.8 million) EFF and ECF arrangements with Armenia were approved by the IMF’s Executive Board on June 28, 2010 (see Press Release No. 10/263). The Board's decision on the fourth review was taken on a lapse of time basis.1
Adherence to the policies agreed under the Fund-supported program has played an important role in helping Armenia restore solid growth. The outlook for 2012 and the medium-term is positive, but not without risks, particularly stemming from Europe and affecting Armenia via Russia. Growth picked up to 4.6 percent in 2011, but is expected to moderate to just below 4 percent in 2012. Inflation has come down significantly over the past year and should remain near the central bank’s target of 4 percent. Credit growth remains strong. The Board is also considering a Financial Sector Stability Assessment (FSSA) for Armenia, under the Financial Sector Assessment Program of the IMF and the World Bank.
The 2011 fiscal deficit was well below program targets, reflecting restrained spending. The deficit is likely to be moderately higher in 2012, but still in line with the program, and with higher expected revenues allowing for increases in priority spending. The external current account deficit has declined significantly, helped by the fiscal adjustment, but remains high. The authorities plan to implement further business environment and tax and pension reform measures. Together with enhanced exchange rate flexibility, these actions should improve productivity and support growth and diversification of exports.
1 The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.