The Executive Board of the International Monetary Fund (IMF) completed
today the fifth and final review of Armenia’s economic performance under a
three-year arrangement under the Extended Fund Facility (EFF). The
completion of the review allows the authorities to draw the equivalent of
SDR 15.69 million (about US$21.6 million). Armenia’s three-year extended
arrangement for SDR 82.21 million (about US$111.57 million at the time of
approval of the arrangement) was approved on March 7, 2014
(See Press Release No. 14/88).
The Executive Board today also concluded the 2017 Article IV Consultation
with Armenia. A respective press release will be issued separately.
Following the Executive Board discussion on Armenia, Mr. Tao Zhang, Deputy
Managing Director and Acting Chair, said:
“Armenia has been facing challenging external conditions which have
contributed to subdued domestic demand, weak fiscal revenues, and
deflationary conditions. Nonetheless, program performance has been
satisfactory. All end-December 2016 quantitative performance criteria,
indicative targets, and structural benchmarks were met. Economic activity
is expected to pick up in 2017 and over the medium term, however, downside
risks and significant structural challenges remain.
“Given the fragile growth, the cyclical position of the economy, and a
projected revenue overperformance, an increase in growth-friendly
foreign-financed capital spending relative to the 2017 budget is justified.
At the same time, the authorities remain committed to maintaining a prudent
medium-term fiscal path by enhancing revenue mobilization and increasing
efficiency in spending. The new Tax Code should be rigorously implemented
by resisting pressures to water down its provisions. It is also essential
to modernize the medium-term fiscal framework, given that the current
fiscal rule lacks flexibility and consideration for cyclical conditions.
“The central bank’s monetary policy easing over the past two years has
helped reduce market interest rates and supported a nascent recovery in
bank lending. Going forward, monetary policy should remain focused on
bringing inflation back to its medium-term target. The central
bank should monitor the impact of recent policy actions and assess the need
for further easing. Also, the flexible exchange rate should continue to act
as a shock absorber, helping support external adjustment and maintain
policy buffers.
“Pursuing structural reforms remains essential for fostering sustainable
and inclusive growth. Strengthening domestic competition and regulatory
reforms are pivotal to promoting private sector development and
diversifying the economy. In this context, the authorities’
growth-promoting initiatives are welcome.”
Table 1. Armenia: Selected Economic and Financial Indicators, 2014–19
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2014
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2015
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2016
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2017
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2018
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2019
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Act.
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Act.
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CR 16/380 1/
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Prel.
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CR 16/380 1/
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Proj.
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Proj.
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Proj.
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National income and prices:
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Real GDP (percent change)
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3.6
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3.2
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2.4
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0.2
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2.7
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2.9
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2.9
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3.0
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Gross domestic product (in billions of drams) 2/
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4,829
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5,044
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5,151
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5,076
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5,405
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5,362
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5,710
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6,117
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Gross domestic product per capita (in U.S. dollars)
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3,889
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3,529
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3,568
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3,533
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3,626
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3,668
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3,829
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4,021
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CPI (period average; percent change)
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3.0
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3.7
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-1.4
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-1.4
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1.6
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1.7
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3.5
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4.0
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CPI (end of period; percent change)
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4.6
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-0.1
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-0.5
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-1.1
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2.8
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1.8
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4.0
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4.0
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GDP deflator (percent change) 2/
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2.3
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1.2
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0.0
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0.5
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2.2
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2.6
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3.5
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4.0
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Money and credit (end of period)
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Reserve money (percent change)
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-0.1
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3.9
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4.9
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13.1
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8.8
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3.0
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11.3
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8.0
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Broad money (percent change)
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8.9
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10.7
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13.9
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16.6
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10.5
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8.4
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10.3
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8.0
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Central government operations (in percent of GDP)
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Revenue and grants (in percent of GDP)
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21.7
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20.9
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21.2
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20.8
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21.8
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21.9
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21.9
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22.7
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Of which
: tax revenue (in percent of GDP)
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8.3
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7.5
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19.5
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6.7
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20.2
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7.2
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7.2
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7.9
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Expenditure (in percent of GDP)
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21.7
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23.4
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27.1
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23.8
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24.6
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23.0
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22.4
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22.1
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Overall balance on a cash basis (in percent of GDP)
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-2.1
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-4.8
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-5.9
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-5.6
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-2.8
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-3.3
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-2.7
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-1.7
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Public and publicly-guaranteed debt (in percent of GDP)
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43.6
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48.7
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54.7
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55.1
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56.4
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55.7
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57.0
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56.4
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Share of foreign currency debt (in percent)
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86.2
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86.9
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85.5
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84.4
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85.0
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87.1
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88.0
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87.7
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External sector
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Exports of goods and services (in millions of U.S.
dollars)
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3,319
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3,137
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3,384
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3,501
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3,585
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3,870
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4,128
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4,370
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Imports of goods and services (in millions of U.S.
dollars)
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-5,487
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-4,418
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-4,327
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-4,569
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-4,672
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-5,083
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-5,273
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-5,506
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Exports of goods and services (percent change)
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5.2
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-5.5
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7.9
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11.6
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5.9
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10.6
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6.7
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5.9
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Imports of goods and services (percent change)
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0.2
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-19.5
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-2.0
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3.4
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8.0
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11.2
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3.8
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4.4
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Current account balance (in percent of GDP)
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-7.6
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-2.6
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-2.9
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-2.7
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-4.0
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-3.8
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-3.2
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-3.0
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Debt service ratio (in percent of exports of G&S)
3/
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8.6
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12.5
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7.2
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6.6
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8.1
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7.3
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7.5
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7.8
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Gross international reserves (in millions of U.S.
dollars)
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1,489
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1,771
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1,953
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2,204
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1,981
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2,259
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2,458
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2,755
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Import cover 4/
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4.0
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4.7
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5.0
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5.2
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5.0
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5.2
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5.4
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5.8
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End-of-period exchange rate (dram per U.S. dollar)
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475
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484
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…
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484
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…
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…
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…
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…
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Average exchange rate (dram per U.S. dollar)
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416
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478
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…
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480
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…
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…
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…
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…
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Sources: Armenian authorities; and Fund staff estimates
and projections
1/ Staff Report for the fourth review.
2/ In 2015 the authorities started calculating GDP
using the SNA 2008 methodology. They have revised GDP
series from 2012 on.
3/ Based on public and publicly-guaranteed debt.
4/ Gross international reserves in months of next
year's imports of goods and services, including the SDR
holdings.
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