International Monetary Fund. External Relations Dept.
Like many emerging market and developing countries around the world, nine countries in the Caucasus and Central Asia are on the receiving end of large inflows of foreign exchange and are grappling with some of the same issues of how to control inflation and manage the exchange rate. An April 25 seminar in Almaty, Kazakhstan, organized by the IMF’s Middle East and Central Asia Department and co-sponsored by the National Bank of Kazakhstan, focused on policy options that would maximize the benefits of the inflows to the countries while maintaining external competitiveness and keeping inflation under control.
Armenia’s economy continues to perform strongly. Prudent fiscal and monetary policies and ongoing structural reforms have contributed to double-digit growth in a low-inflation environment, a continued reduction in poverty, and a notable improvement in tax performance. The Poverty Reduction and Growth Facility (PRGF)-supported program is on track. Policy discussions centered around the appropriate monetary, exchange rate, and fiscal policy mix to maintain macroeconomic stability in the context of sizable foreign exchange inflows and on measures needed over the medium term to sustain and broaden economic growth.
This 2008 Article IV Consultation highlights that Armenia’s recent economic performance has remained strong, and the economy is poised for another year of double-digit growth. Rising inflation, a widening current account deficit, and rapid credit growth have raised concerns about overheating. Executive Directors have commended the authorities for the successful implementation of macroeconomic policies under the Poverty Reduction and Growth Facility (PRGF)-supported program that expired in May 2008. Directors have also welcomed the authorities’ intention to withdraw fiscal stimulus during 2008–09 to address current imbalances.
This paper examines Armenia’s 2004 Article IV Consultation, Sixth Review Under the Poverty Reduction and Growth Facility, and Request for Waiver of Performance Criteria. Armenia’s strong economic performance has been continuing in 2004. In January–September, the year-over-year rate of GDP growth was 10 percent, fueled by increases in agricultural production, housing construction, and services. Since mid-2003, banking sector performance has improved, and there has been a gradual return of confidence toward banks following the resolution of eight intervened banks.
The IMF Research Bulletin, a quarterly publication, selectively summarizes research and analytical work done by various departments at the IMF, and also provides a listing of research documents and other research-related activities, including conferences and seminars. The Bulletin is intended to serve as a summary guide to research done at the IMF on various topics, and to provide a better perspective on the analytical underpinnings of the IMF’s operational work.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses the Republic of Armenia’s Sixth reviews under the Extended Fund Facility Arrangement, and the Extended Credit Facility Arrangement. The Central Bank of Armenia has kept the policy rate at 8 percent since 2011, and has narrowed the corridor around the policy rate from 600 to 300 basis points while strengthening fine-tuning operations. Interbank interest rates have become less volatile. External adjustment slowed considerably in 2012, and external vulnerabilities persist. The current account deficit improved by just 0.3 percentage points of GDP as exports, and remittances grew at a healthy pace, as did imports.
This Selected Issues paper analyses the impact that rising energy import prices might have on growth and inflation in Ukraine. The paper examines how rising gas prices might elevate macrofiscal risks in Ukraine’s state enterprise sector. It assesses Ukraine’s equilibrium exchange rate mainly based on the macroeconomic balance approach, and provides an account of the monetary framework debate. The paper also summarizes the current framework’s achievements and shortcomings, and looks at traditional criteria for determining whether a peg or float fits Ukraine’s economic characteristics.
This paper discusses key findings of the Fifth Review Under the Poverty Reduction and Growth Facility (PRGF) for Armenia. Fiscal policy has been prudent, but increasing expenditure pressures are creating medium-term fiscal risks. Tax collection still falls short of financing needs for infrastructure and poverty-reducing services, calling for further strengthening of tax administration. Monetary policy will need to be tightened in light of rising inflation risks. A firm commitment to a medium-term inflation target will be critical for anchoring price expectations and building credibility in the transition to full-fledged inflation targeting.
In this study, Armenia’s financial challenges observed in the global crisis are discussed, and also the development processes initiated by Armenia are analyzed. Short- and medium-term outlooks, and risks are also outlined. Fiscal, monetary, and banking sector policies play important roles in the development of the financial system. Structural reforms are accelerated for addressing imbalances, sustainable growth, and poverty reduction. Sound macroeconomic policies and structural reforms will help to ensure rise in productivity, exports, and inflation pickup and reduce the foreign exchange risk.
This paper reviews economic developments in the Republic of Armenia during 1995–96. Stabilization and economic growth continued in 1995 and 1996. Official estimates indicate that real GDP increased by 6.9 percent in 1995 and by 4.3 percent during the first six months of 1996 compared with the same period of the preceding year. The trade sector grew by 75 percent in 1995 and 18.5 percent during the first six months of 1996, increasing its share in GDP from 4 percent in 1994 to 9 percent in 1996.