{
  "title": "IMF Staff Completes Second Review under the Stand-By Arrangement and the 2023 Article IV Consultation with Armenia",
  "publication": "IMF News, November 7, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/11/07/pr23382-armenia-imf-staff-completes-second-review-under-sba-2023-article-iv-consultation",
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  "summary": "An International Monetary Fund (IMF) team, led by Iva Petrova, visited Yerevan during September 13-25 to hold discussions with the Armenian authorities for the 2023 Article IV consultation and the second review under the Stand-By Arrangement (SBA) with Armenia.",
  "publishDate": "2023-11-07",
  "sections": [
    {
      "heading": "Mission, scope, and IMF agreement",
      "content": "- IMF team led by Iva Petrova visited Yerevan during September 13-25 for the 2023 Article IV consultation and the second review under the Stand-By Arrangement (SBA).\n- Staff-level agreement reached on the second review of the SBA; subject to approval by the IMF’s Executive Board, scheduled to consider the review in mid-December.\n- Board approval would enable access of about US$24.3 million (SDR 18.4 million), bringing the total access to about US$72.9 million (SDR 55.2 million).\n- The SBA is being treated by the Armenian authorities as precautionary and aims to ensure policy continuity and support the government reform agenda."
    },
    {
      "heading": "Recent performance and near-term outlook",
      "content": "- Armenia’s economy grew by 10.5 percent in the first half of 2023, supported by robust private consumption and services trade.\n- Staff projections:\n  - GDP growth expected to reach 7 percent in 2023.\n  - GDP growth expected to decelerate to 5 percent in 2024.\n- Risks and scenario notes:\n  - Upside: growth could surprise on the upside in the event of a renewed bout of income and capital flows and strong implementation of reforms.\n  - Downside risks: elevated, including from geopolitical tensions, tight global financial conditions, slowdown in external demand, and abrupt reversal of capital flows."
    },
    {
      "heading": "Inflation, monetary policy, and exchange rate",
      "content": "- Inflation has remained subdued, helped by proactive monetary policy, exchange rate appreciation, and falling food and transportation prices.\n- Service price inflation has been stickier.\n- The Central Bank of Armenia (CBA) has started gradual normalization of monetary policy and should continue a data-dependent approach to ensure inflation expectations remain anchored.\n- The flexible exchange rate should remain a key shock absorber.\n- The CBA continues efforts to strengthen prudential and supervisory frameworks to help stem financial sector risks, including from rising housing prices."
    },
    {
      "heading": "Fiscal stance and public debt",
      "content": "- The overall fiscal balance recorded a surplus of 0.7 percent of GDP through September 2023.\n- Central government debt remains sustainable.\n- The draft 2024 budget:\n  - Appropriately accommodates refugee support while ensuring macroeconomic stability.\n  - Fiscal deficit is expected to support priority social and capital expenditures, with efforts continuing to improve revenue mobilization.\n  - It should help keep the economy from overheating and maintain a moderate debt level."
    },
    {
      "heading": "Financial sector and banking system",
      "content": "- The banking system has strong capital and liquidity buffers.\n- Banking sector profitability continues to remain high.\n- Ongoing CBA measures aim to strengthen prudential and supervisory frameworks."
    },
    {
      "heading": "Refugee response and social integration",
      "content": "- The authorities have responded proactively to the needs of the more than 100,000 ethnic Armenian refugees from Nagorno Karabakh.\n- Immediate measures include cash support to address essential needs, temporary shelters, and financial aid to cover accommodation and utility expenses.\n- Ongoing comprehensive assessment of medium-to-long term needs (housing, education, employment, social protection) would assist in their integration in Armenia."
    },
    {
      "heading": "Structural reforms and policy priorities",
      "content": "- Policy priorities: preserve macroeconomic stability, strengthen economic resilience, and continue structural reforms in:\n  - Product and labor markets.\n  - Revenue mobilization and public investment management.\n  - Improving the business environment to boost productivity and foster more inclusive growth.\n- Specific reform recommendations and actions:\n  - Maintain the strong policy and reform momentum; build fiscal buffers and further strengthen medium term sustainability.\n  - Keep inflation expectations anchored and safeguard financial stability.\n  - Complete governance reforms.\n  - Boost productivity to deliver sustained and inclusive growth in line with the knowledge-based, export-oriented, and investment-driven growth strategy envisaged in the 2021-26 Government Reform Program.\n  - Develop and implement concrete and fully costed employment and export strategies.\n  - Upgrade the insolvency framework and prioritize governance reforms to support investment and improve the business environment.\n  - Implement the public investment management action plan to improve the implementation and quality of capital expenditures.\n  - Create fiscal space through revenue enhancing tax policies—including via rationalization of tax expenditures—and ongoing tax administration reforms.\n\n---\n\n Content in this bundle\n\n- Pr23382 Arm Armenia\n  - Pr23382 Arm Armenia (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Pr23382 Arm Armenia (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Republic of Armenia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/11/07/pr23382-armenia-imf-staff-completes-second-review-under-sba-2023-article-iv-consultation"
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    "Published: November 7, 2023",
    "IMF team led by Iva Petrova visited Yerevan during September 13-25 for the 2023 Article IV consultation and the second review under the Stand-By Arrangement (SBA).",
    "Staff-level agreement reached on the second review of the SBA; subject to approval by the IMF’s Executive Board, scheduled to consider the review in mid-December.",
    "Board approval would enable access of about US$24.3 million (SDR 18.4 million), bringing the total access to about US$72.9 million (SDR 55.2 million).",
    "The SBA is being treated by the Armenian authorities as precautionary and aims to ensure policy continuity and support the government reform agenda.",
    "Armenia’s economy grew by 10.5 percent in the first half of 2023, supported by robust private consumption and services trade.",
    "Staff projections:",
    "Risks and scenario notes:",
    "Inflation has remained subdued, helped by proactive monetary policy, exchange rate appreciation, and falling food and transportation prices.",
    "Service price inflation has been stickier.",
    "The Central Bank of Armenia (CBA) has started gradual normalization of monetary policy and should continue a data-dependent approach to ensure inflation expectations remain anchored.",
    "The flexible exchange rate should remain a key shock absorber.",
    "The CBA continues efforts to strengthen prudential and supervisory frameworks to help stem financial sector risks, including from rising housing prices.",
    "The overall fiscal balance recorded a surplus of 0.7 percent of GDP through September 2023.",
    "Central government debt remains sustainable.",
    "The draft 2024 budget:",
    "The banking system has strong capital and liquidity buffers.",
    "Banking sector profitability continues to remain high.",
    "Ongoing CBA measures aim to strengthen prudential and supervisory frameworks.",
    "The authorities have responded proactively to the needs of the more than 100,000 ethnic Armenian refugees from Nagorno Karabakh.",
    "Immediate measures include cash support to address essential needs, temporary shelters, and financial aid to cover accommodation and utility expenses.",
    "Ongoing comprehensive assessment of medium-to-long term needs (housing, education, employment, social protection) would assist in their integration in Armenia.",
    "Policy priorities: preserve macroeconomic stability, strengthen economic resilience, and continue structural reforms in:",
    "Specific reform recommendations and actions:",
    "**Pr23382 Arm Armenia**",
    "[Republic of Armenia and the IMF](http://www.imf.org/external/country/ARM/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[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)"
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