## IMF Reaches Staff-Level Agreement on Second Review for Armenia’s Stand-By Arrangement, Request for Augmentation _IMF News, April 9, 2020_ ## Source details **Canonical URL:** [IMF Reaches Staff-Level Agreement on Second Review for Armenia’s Stand-By Arrangement, Request for Augmentation](https://www.imf.org/en/news/articles/2020/04/09/pr20140-armenia-imf-reaches-staff-level-agreement-second-review-sba-request-augmentation) ## Other formats - [Markdown version](/en/news/articles/2020/04/09/pr20140-armenia-imf-reaches-staff-level-agreement-second-review-sba-request-augmentation/index.md) - [Structured JSON version](/en/news/articles/2020/04/09/pr20140-armenia-imf-reaches-staff-level-agreement-second-review-sba-request-augmentation/index.json) - [Bundle manifest](/en/news/articles/2020/04/09/pr20140-armenia-imf-reaches-staff-level-agreement-second-review-sba-request-augmentation/bundle-manifest.json) ## Bibliographic details - Published: April 9, 2020 --- ### Staff-level agreement and financing decision - IMF team reached a staff-level agreement with the Armenian authorities on the conclusion of the second review under their reform program supported by a three-year Stand-By Arrangement (SBA). - Agreement is subject to approval by the IMF’s Executive Board, which is scheduled to consider the review in mid-May. - Staff will recommend an increase in IMF financial support for Armenia by SDR128.80 million (about US$175 million). - Together with the authorities’ intention to draw purchase rights accumulated under the SBA, SDR 206 million (about US$280 million) would be available to be disbursed immediately after the Board meeting. - The additional financing is justified by urgent balance of payments financing needs resulting from the consequences of the spread of the COVID-19 virus and will be allocated to the budget to help meet urgent medical and socio-economic needs during the peak of the virus outbreak. ### Near-term economic outlook and projections - Economic growth is expected at -1.5 percent in 2020 given: - COVID-related restrictions on domestic mobility and activity, - substantially lower external demand, - tighter financial conditions, - disruptions in global trade and supply chains. - Projections are subject to very high uncertainty since the duration of containment measures is hard to predict. ### Authorities’ COVID-19 response and policy measures - Authorities focused on measures to contain the spread of COVID-19 and to ensure health system readiness. - Actions taken or underway include: - Equipping the Ministry of Health with additional resources and legislative powers to expeditiously acquire necessary goods and equipment. - Economic policy response framed around a set of measures announced to be about 2 percent of GDP that include liquidity provision to businesses, direct labor subsidies, and lump sum transfers to vulnerable individuals. - Staff welcomes the economic policy response and emphasizes: - The authorities’ commitment to ensure strong governance and transparency in implementation of these programs. - The need to continuously monitor the implementation to ensure effectiveness and evenhanded coverage. ### Fiscal impact and debt outlook - The fiscal deficit in 2020 is expected to widen to about 5 percent of GDP due to lower revenues and higher spending on healthcare and economic support. - The emerging financing gap would be closed by mobilizing financing from the IMF and other partners to complement that available from the domestic capital market. - Government debt is projected to exceed 60 percent of GDP in 2020. - As the crisis abates, the authorities are committed to the medium-term fiscal goal of debt sustainability, which will see government debt-to-GDP gradually decline over the medium term in line with Armenia’s fiscal rule, while maintaining space for investment and social spending. ### Central Bank actions and financial sector resilience - The Central Bank of Armenia (CBA) has: - Promptly reduced the policy rate to boost inflation and support economic activity. - Stood ready to adjust policies in case of capital outflow pressures and disorderly exchange rate movements to preserve financial stability. - Provided liquidity that helped domestic financial markets to function generally smoothly since the onset of the pandemic. - CBA regulatory and supervisory responses have sought to balance preserving financial stability, maintaining banking system soundness, and sustaining economic activity. ### Staff appraisal and medium-term priorities - The increase in IMF support will help contain short-term risks and provide resources to meet urgent medical and socio-economic needs during the peak of the virus outbreak, thereby preserving gains in economic potential and inclusion achieved over recent years. - Beyond the short term, staff welcomes the authorities’ intention to continue economic reform aimed at: - Lifting inclusive and resilient growth, - Safeguarding social spending, - Bolstering financial sector resilience, - Enhancing business climate and governance. *Press Release No. 20/140, April 9, 2020, IMF Communications Department.* --- ## Content in this bundle - **Press Release-English** - [Press Release-English (Markdown version)](/-/media/files/news/press-release/2020/pr20140-arm-armenia.pdf.md){rel="alternate" type="text/markdown"} - [Press Release-English (PDF)](/-/media/files/news/press-release/2020/pr20140-arm-armenia.pdf){rel="external" type="application/pdf"} --- ## References - [Republic of Armenia and the IMF](http://www.imf.org/external/country/ARM/index.htm) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2020/04/09/pr20140-armenia-imf-reaches-staff-level-agreement-second-review-sba-request-augmentation_