December 3, 2025
PRESS OFFICER: Mayada Ghazala
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the 2025 Article IV consultation,1 completed the sixth review under the Stand-By Arrangement (SBA), and subsequently cancelled the SBA and approved a new 36-month SBA with Armenia amounting to SDR 128.8 million (100 percent of Armenia’s quota in the IMF or about US$ 175 million). The cancellation of the SBA, which would have expired on December 11, 2025, allows the approval of the new SBA, which will support the authorities’ efforts to maintain macroeconomic stability and advance their structural reform agenda, and provide insurance in an uncertain environment. The authorities have consented to the publication of the Staff Report prepared for this consultation.2
Upon the Board’s approval of the new SBA, an amount equivalent to SDR 18.4 million (about US$25 million) becomes immediately available to Armenia. The remaining amount will be made available in equal tranches, subject to six semi-annual reviews. The Armenian authorities have indicated that they intend to treat the arrangement as precautionary.
Armenia’s economic performance has remained strong despite a series of shocks amid an uncertain global environment. Thanks to the authorities’ agile policies and unforeseen inflows of labor and capital, real GDP grew on average by 8.9 percent annually in the past three years, and is expected to remain strong reaching about 5 and 5.5 percent in 2025 and 2026, respectively.
The economic outlook remains positive, with steady growth and inflation converging to the CBA’s target. Continued implementation of prudent policies and acceleration of reforms will be critical to further strengthen resilience and secure inclusive and sustainable growth in the period ahead.
The authorities’ 2026 budget and medium-term fiscal consolidation planned in the authorities’ MTEF are appropriate. The planned fiscal stance in 2026 is mildly contractionary, while accommodating spending on refugee support, health, and public investment. Over the medium term, further deficit reduction while creating fiscal space for priority social and capital spending will be underpinned by additional revenue mobilization through broadening the tax base as well as revenue administration measures, and fiscal structural reforms to raise spending efficiency.
The CBA’s new monetary policy framework, centered on a prudent risk management approach and a high degree of transparency, supports its inflation target of 3 percent. The flexible exchange rate continues as a key shock absorber, which, together with healthy reserve buffers, will continue to serve the economy well in the event of external shocks.
The banking system is well capitalized and liquid, and mortgage growth has receded somewhat. The CBA’s monitoring and readiness to deploy its macroprudential tools will help mitigate risks arising from continued strong credit growth. Development of further macroprudential tools and further strengthening of the CBA’s prudential and supervisory framework and toolkit will further buttress financial system resilience.
Structural reforms should be accelerated to raise labor force participation and employment, and support export diversification. Improvements in the investment climate through better governance and strengthening of the legal framework for businesses will support these reforms. Further steps to improve the quality of statistical reporting will help support decision making.
Following the Executive Board’s discussion today, Mr. Li, Deputy Managing Director and Acting Chair, made the following statement:
“Armenia has successfully navigated multiple challenges in recent years, while preserving macroeconomic and financial stability. The economic outlook remains positive, amid increased growth potential and inflation converging to target. Performance under the current Stand-By Arrangement (SBA) has been strong. Continued policy prudence and acceleration of reforms—supported by a successor SBA, which the authorities intend to treat as precautionary—will be important to further strengthen resilience and secure inclusive and sustainable growth.
“The policy focus of the 2026 budget on fiscal consolidation while preserving space for policy priorities including refugee support, health, and public investment is appropriate. In the medium term, revenue mobilization and progress on structural fiscal reforms to enhance the effectiveness of public investment will create space for priority spending while reducing the fiscal deficit further, thereby ensuring that public debt remains moderate.
“The Central Bank of Armenia’s (CBA) new monetary policy framework, centered on prudent risk management and combined with a high degree of transparency, supports the CBA’s inflation target of 3 percent. The CBA should continue to calibrate policy rate actions to keep inflation close to target and inflation expectations well anchored. The flexible exchange rate has served Armenia well in absorbing external shocks, while building reserve buffers.
“With continued strong credit growth, driven by loans to the construction industry and consumers, the CBA will need to stand ready to deploy its macroprudential tools to mitigate risks to financial stability. Further enhancing the macroprudential toolkit and strengthening the supervisory framework are also key.
“Advancing structural reforms and strengthening governance will support sustainable and inclusive growth. The authorities’ efforts to increase labor market participation and reduce structural unemployment, diversify exports, and strengthen transparency and competitiveness will enhance economic resilience and boost Armenia’s economic growth potential. Improving the quality of statistical reporting will be important to support decision making.
Executive Board Assessment3
Executive Directors agreed with the thrust of the staff appraisal. They commended Armenia’s strong program ownership and sound policies which have contributed to the country’s macroeconomic and financial stability despite a challenging global and regional environment. Directors concurred that a successor Stand-By Arrangement—which the authorities intend to treat as precautionary—supported by Fund technical assistance, will help sustain policy prudence, anchor the reform momentum, and boost confidence in the economy.
Directors welcomed the significant improvements in the fiscal framework. They underscored the importance of advancing a gradual fiscal consolidation and, in this regard, welcomed the authorities’ 2026 draft budget and the targets envisaged in the medium-term expenditure framework. Directors emphasized that mobilizing additional revenue is critical to create space for priority spending, while reducing the fiscal deficit further. They also recommended fiscal structural reforms to strengthen fiscal planning, increase the effectiveness of public investment, and enhance fiscal risk management.
Directors commended the Central Bank of Armenia’s (CBA) success in containing inflation and concurred that monetary policy should remain data-driven. They welcomed the improvements to the CBA’s monetary policy framework and enhanced transparency, and encouraged further reforms to improve monetary policy transmission. Directors agreed that the flexible exchange rate should continue to serve as a key shock absorber.
Directors positively noted that the banking sector is well-capitalized and liquid. Noting rising credit risks, they supported advancing the CBA’s prudential and supervisory frameworks and urged the CBA to stand ready to deploy further macroprudential tools, if needed. Advancing the planned stablecoin regulation is also important.
Directors recommended accelerating structural reforms to modernize the economy and support private sector-led, job-rich growth. They encouraged implementing measures to boost labor force participation and employment and to support export diversification. Reforms to improve the investment climate, enhance governance and competitiveness, and secure long-term energy security are also key. Directors noted the importance of enhancing the quality of statistical reporting to support decision making.
It is expected that the next Article IV consultation with the Republic of Armenia will be held in accordance with the Executive Board decision on consultation cycles for members with Fund arrangements.
| Table 1. Armenia: Selected Economic and Financial Indicators, 2022-27 | |||||||
| 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | ||
| Projections | |||||||
| National income and prices: | |||||||
| Real GDP (percent change) | 12.6 | 8.3 | 5.9 | 5.0 | 5.5 | 5.5 | |
| Contribution to growth | |||||||
| Final consumption expenditure | 3.5 | 5.1 | 4.0 | 3.3 | 3.1 | 4.0 | |
| Gross fixed capital formation | 3.0 | 3.0 | 2.6 | 2.1 | 1.8 | 1.3 | |
| Changes in inventories | -0.8 | -0.2 | -0.3 | -1.1 | 0.0 | 0.0 | |
| Net exports of goods and services | 6.2 | 0.0 | 2.3 | -1.0 | 0.0 | 0.1 | |
| Gross domestic product (in bn drams) | 8,501 | 9,493 | 10,193 | 10,992 | 11,945 | 12,984 | |
| GDP (in millions of U.S. dollars) | 19,979 | 24,153 | 26,010 | 27,903 | 29,025 | 30,803 | |
| GDP per capita (in U.S. dollars) | 6,695 | 7,961 | 8,528 | 9,041 | 9,434 | 10,045 | |
| CPI (end of period; percent change) | 8.4 | -0.7 | 1.7 | 3.5 | 3.1 | 3.0 | |
| GDP deflator (percent change) | 8.0 | 3.1 | 1.4 | 2.7 | 3.0 | 3.0 | |
| Unemployment rate (in percent) | 13.5 | 12.4 | 13.9 | 13.7 | 13.6 | 13.5 | |
| Investment and saving (in percent of GDP) | |||||||
| Investment | 22.4 | 22.9 | 23.8 | 24.7 | 23.5 | 23.1 | |
| National savings | 23.1 | 20.2 | 19.2 | 20.2 | 19.0 | 18.7 | |
| Money and credit (end of period) | |||||||
| Reserve money (percent change) | 5.0 | -4.0 | 13.8 | 14.9 | 13.4 | 14.1 | |
| Broad money (percent change) | 16.1 | 17.4 | 13.7 | 8.6 | 16.2 | 16.1 | |
| Private sector credit growth (percent change) | 4.5 | 18.4 | 26.4 | 16.8 | 16.3 | 16.4 | |
| Central government operations (in percent of GDP) | |||||||
| Revenue and grants | 24.3 | 24.9 | 25.3 | 25.6 | 25.8 | 25.8 | |
| Of which: tax revenue | 21.9 | 22.5 | 22.4 | 23.4 | 23.7 | 23.7 | |
| Expenditure | 26.4 | 26.9 | 29.0 | 30.6 | 30.3 | 29.3 | |
| Overall balance on a cash basis | -2.1 | -2.0 | -3.7 | -5.0 | -4.5 | -3.5 | |
| Public and publicly guaranteed debt | 46.7 | 48.2 | 48.0 | 50.3 | 51.5 | 51.8 | |
| Share of foreign currency debt (in percent) | 52.7 | 48.2 | 48.1 | 47.2 | 47.9 | 47.8 | |
| External sector | |||||||
| Exports of goods and services (in million US$) | 10,339 | 14,718 | 19,072 | 13,131 | 13,416 | 13,877 | |
| Imports of goods and services (in million US$) | -10,439 | -15,062 | -19,804 | -14,244 | -14,539 | -15,074 | |
| Exports of goods and services (percent change) | 107.7 | 42.3 | 29.6 | -31.1 | 2.2 | 3.4 | |
| Imports of goods and services (percent change) | 71.3 | 44.3 | 31.5 | -28.1 | 2.1 | 3.7 | |
| Current account balance (in percent of GDP) | 0.7 | -2.8 | -4.6 | -4.5 | -4.5 | -4.4 | |
| FDI (net, in millions of U.S. dollars) | 926 | 527 | 75 | 397 | 446 | 459 | |
| Gross international reserves (in million US$) | 4,112 | 3,608 | 3,684 | 4,159 | 4,297 | 4,489 | |
| Import cover 1/ | 3.3 | 2.2 | 3.1 | 3.4 | 3.4 | 3.5 | |
| End-of-period exchange rate (dram per US$) | 394 | 405 | 397 | … | … | … | |
| Sources: Armenian authorities; and Fund staff estimates and projections. | |||||||
| 1/ Gross international reserves in months of next year's imports of goods and services, including the SDR holdings. | |||||||
1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
2 Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the https://www.imf.org/en/countries/arm page.
3 At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
