IMF Executive Board Concludes Second Review Under Armenia’s Stand-By Arrangement and Augments Access to Address the Impact of COVID-19

May 18, 2020

  • The IMF Executive Board decision allows an immediate release of US$280 million for Armenia.
  • The augmentation of access will help the authorities contain short-term risks and will provide resources to meet the urgent human and economic implications of COVID-19 pandemic.
  • To preserve macroeconomic stability, the authorities’ have taken a number of measures to mitigate the near-term impact of COVID-19 and remain committed to continued economic reform aimed at lifting inclusive and resilient growth and safeguarding social spending.

Washington, DC – The Executive Board of the International Monetary Fund (IMF) completed the second review of the Republic of Armenia’s performance under the program supported by the Stand-By Arrangement (SBA). Armenia’s three-year SBA of SDR 180 million (about US$248 million), equivalent to 139.75 percent of Armenia’s quota in the IMF, was approved by the IMF’s Board on May 17, 2019 (see Press Release No. 19/173).

The Executive Board also approved the authorities’ request to augment access under Armenia’s SBA arrangement by 100 percent of quota (SDR 128.80 million or about US$175 million), bringing overall access under the SBA arrangement to SDR 308.8 million (around 240 percent of Armenia’s quota). The augmentation and completion of the review will make SDR205.94 million (about US$280 million) immediately available.

The impact of the COVID-19 pandemic and the tightening of global financial conditions have disrupted Armenia’s above-trend growth and favorable economic conditions. The near-term outlook has significantly weakened, with fiscal and current account deficits widening considerably this year. The Fund’s financial support will help Armenia meet these challenges, including the urgent social and economic implications of COVID-19 pandemic.

Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Chair, made the following statement:

“Following a strong performance in 2019, the Armenian economy was hit hard by the COVID-19 pandemic. The government has proactively responded to the crisis, adopting widespread containment measures while supporting vulnerable individuals and firms in the most affected sectors.

The fiscal deficit is projected to widen considerably in 2020, reflecting the impact of the cycle on revenues and higher current spending for healthcare and economic support to vulnerable households and firms. The authorities are committed to pursuing their medium-term goal of debt sustainability once the crisis abates, and public debt is expected to decline over the medium-term in line with Armenia’s fiscal rule, while maintaining space for investment and social spending.

The Central Bank of Armenia responded to the crisis by balancing its mandates for price and financial stability. To support the economy, the central bank lowered its policy rate and ensured ample market liquidity. It also intervened to limit excessive exchange rate volatility.

Implementation of the authorities’ reform agenda will bolster sustainable and inclusive growth. This includes efforts to establish a holistic anti-corruption framework, improve the business climate and support small and medium-sized enterprises, and strengthen the health and education sectors.

The augmentation of access under the Stand-by Arrangement will provide much needed support, allowing the authorities to mitigate the pandemic and support affected households and businesses.”



Table 1. Armenia: Selected Economic and Financial Indicators, 2017–25

2017

2018

2019

2020

2021

2022

2023

2024

2025

Act.

Act.

Act.

Proj.

National income and prices

Real GDP (percent change)

7.5

5.2

7.6

-1.5

4.8

4.5

4.5

4.5

4.5

Final consumption expenditure, Contrib. to Growth

7.4

4.1

8.8

1.2

1.5

1.8

1.8

1.5

1.9

Gross fixed capital formation, Contrib. to Growth

1.5

0.7

0.8

0.0

2.3

2.4

2.5

2.5

2.6

Changes in inventories, Contrib. to Growth

1.1

3.8

-1.7

-2.5

0.0

0.0

0.0

0.0

0.0

Net exports of goods and services, Contrib. to Growth

-1.2

-2.7

0.1

-0.2

1.0

0.3

0.1

0.1

0.0

Gross domestic product (in billions of drams)

5,564

6.017

6.569

6,519

6,990

7,543

8,181

8,909

9,721

Gross domestic product (in millions of USD)

11,527

12.457

13.672

12,977

13,422

14,536

15,597

16,768

18,041

Gross domestic product per capita (in USD)

3,869

4.196

4.615

4,370

4,520

4,894

5,251

5,645

6,073

CPI (period average; percent change)

1.0

2.4

1.4

0.9

2.0

3.0

3.5

3.8

3.9

CPI (end of period; percent change)

2.6

1.8

0.7

1.5

2.5

3.5

4.0

4.0

4.0

GDP deflator (percent change)

2.1

2.8

1.5

1.0

2.3

3.3

3.8

4.2

4.4

Unemployment rate (in percent)

20.9

20.5

18.9

19.0

17.9

17.6

17.5

17.4

17.3

Investment and saving

(in percent of GDP)

Investment

19.3

22.4

17.4

21.4

21.9

22.4

23.0

23.5

24.1

National savings

16.3

13.0

11.0

12.8

14.7

15.7

16.6

17.4

18.1

Money and credit (end of period)

(percent change)

Reserve money

-1.0

17.8

8.8

5.4

13.2

11.1

10.8

8.0

8.2

Broad money

18.5

7.4

11.2

3.9

13.2

11.1

10.8

8.0

8.2

Private sector credit growth

16.5

17.2

18.5

7.0

13.0

11.0

9.0

8.5

8.5

Central government operations

(in percent of GDP; unless otherwise indicated)

Revenue and grants

21.2

22.3

23.9

23.3

23.7

24.9

25.3

25.4

25.4

Of which : tax revenue

20.2

21.0

22.3

21.7

22.0

22.9

23.1

23.2

23.3

Expenditure

26.0

24.1

24.9

28.3

26.5

26.9

26.9

26.9

26.9

Overall balance on a cash basis

-4.8

-1.8

-1.0

-5.0

-2.9

-2.0

-1.7

-1.5

-1.5

Public and publicly guaranteed (PPG) debt

58.9

55.8

53.6

64.1

62.1

59.8

57.0

54.8

52.8

Central Government's PPG debt (in percent)

53.7

51.3

50.0

60.9

59.1

57.3

55.0

53.3

51.8

Share of foreign currency debt (in percent)

81.1

80.0

79.0

75.7

73.5

74.1

75.1

74.3

73.7

External sector

(in millions of USD; unless otherwise indicated)

Exports of goods and services

4,312

4,700

5,274

4,091

4,817

5,344

5,765

6,150

6,557

Imports of goods and services

-5,723

-6,647

-7,246

-5,946

-6,606

-7,289

-7,815

-8,307

-8,830

Exports of goods and services (percent change)

23.2

9.0

12.2

-22.4

17.7

10.9

7.9

6.7

6.6

Imports of goods and services (percent change)

26.7

16.1

9.0

-17.9

11.1

10.3

7.2

6.3

6.3

Current account balance (in percent of GDP)

-3.0

-9.4

-8.2

-8.6

-7.2

-6.7

-6.4

-6.1

-6.0

FDI (net)

222

247

397

161

292

385

404

439

461

Gross international reserves

2,314

2,259

2,850

2,190

2,245

2,446

2,578

2,587

2,598

Import cover 1/

4.2

3.7

5.7

4.0

3.7

3.8

3.7

3.5

3.3

End-of-period exchange rate (dram per USD)

484

484

480

Average exchange rate (dram per USD)

483

483

480

Sources: Armenian authorities, and IMF staff estimates and projections.

1/ Gross international reserves in months of next year's imports of goods and services, including the SDR holdings.

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Nadya Saber

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson