Journal Issue
Share
Article

IMF Executive Board Concludes First Review under the Stand-By Arrangement for the Republic of Armenia

Author(s):
International Monetary Fund. Middle East and Central Asia Dept.
Published Date:
December 2019
Share
  • ShareShare
Show Summary Details
  • Armenia’s economic performance is strong with healthy growth, low inflation, a stable financial system, with increasing foreign reserves and higher revenues.
  • Despite fiscal overperformance, it is key to maintain the reform momentum to strengthen revenue mobilization, including by completing reforms to property taxation.
  • Implementation of the authorities’ reform agenda including efforts to improve governance by establishing a holistic anti-corruption framework, will bolster sustainable and inclusive growth.

On December 20, 2019, the Executive Board of the International Monetary Fund (IMF) completed the first review under of the Republic of Armenia’s performance under the program supported by the Stand-By Arrangement (SBA). The 36-month SBA, with a total access of SDR 180 million (about US$ 248.2 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 Armenian authorities continue to view the SBA as precautionary until the program expires in May 16, 2022, an insurance policy against unforeseen economic shocks that could lead to a balance of payments need.

Following the Executive Board’s discussion today, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair issued the following statement:

“Armenia’s economic performance is strong with healthy growth, low inflation, a stable financial system, and improving external and fiscal buffers. Public debt remains on a declining trajectory, with Armenia expected to achieve its medium-term debt objective, several years earlier than expected. This favorable outlook provides an opportunity to accelerate reform efforts in support of more balanced and inclusive growth, declining poverty, and falling unemployment.

“The 2019 fiscal outturn overperformed the budget, reflecting both higher-than-expected revenues and lower-than-expected capital spending. Strengthening the implementation of capital spending, in line with a sound public investment management process, remains a priority. Despite fiscal overperformance, reform momentum should be maintained to improve revenue mobilization, including by completing reforms to property taxation and further strengthening revenue administration. Bolstering the budgetary process would also further safeguard the credibility of the fiscal rule.

“The monetary policy framework’s focus on price stability has served Armenia well. The authorities’ implementation of Basel III measures will raise the resilience of the financial system, while their plans to develop the capital market and improve access to finance are also welcome.

“Implementation of the authorities’ reform agenda will bolster sustainable and inclusive growth. Efforts to improve governance by establishing a holistic anti-corruption framework are ongoing. The authorities also reaffirmed their commitment to protect the most vulnerable by expanding, and better targeting, their social safety net. Enhanced steps to strengthen human capital and increase female labor force participation are key focal points of the authorities’ longer-term structural agenda”

Table 1.Armenia: Selected Economic and Financial Indicators, 2016–24
201620172018201920202021202220232024
Act.Act.Act.Proj.
National income and prices
Real GDP (percent change)0.27.55.26.54.94.54.54.54.5
Final consumption expenditure, Contrib. to Growth-0.97.42.78.33.31.31.71.71.8
Gross fixed capital formation, Contrib. to Growth-2.41.50.82.12.53.02.31.91.5
Changes in inventories, Contrib. to Growth0.71.14.0-3.6-1.00.00.00.00.0
Net exports of goods and services, Contrib. to Growth3.1-1.2-1.8-0.20.10.20.50.91.2
Gross domestic product (in billions of drams)5,0675,5646,0056,5417,0957,6368,2838,9929,751
Gross domestic product (in millions of USD)10,54611,52712,43313,44414,13214,83915,70416,63217,596
Gross domestic product per capita (in USD)3,5243,8694,1884,5284,7594,9975,2885,5995,924
CPI (period average; percent change)-1.41.02.51.62.53.34.04.04.0
CPI (end of period; percent change)-1.12.71.81.53.33.84.14.04.0
GDP deflator (percent change)0.32.12.52.33.43.03.83.93.8
Unemployment rate (in percent)20.418.918.517.617.517.216.916.816.7
Investment and saving(in percent of GDP)
Investment18.019.322.422.924.125.225.325.325.3
National savings16.016.313.014.916.217.718.218.919.3
Money and credit (end of period)(percent change)
Reserve money13.1-1.017.89.08.88.08.38.58.7
Broad money17.518.57.49.18.88.08.38.58.7
Private sector credit growth6.016.517.216.011.511.010.59.08.5
Central government operations(in percent of GDP; unless otherwise indicated)
Revenue and grants21.421.222.323.523.923.824.024.224.3
Of which: tax revenue20.120.220.721.822.322.522.722.923.1
Expenditure27.026.024.125.026.225.725.926.126.2
Overall balance on a cash basis-5.6-4.8-1.8-1.5-2.3-1.9-1.9-1.9-1.9
Public and publicly-guaranteed (PPG) debt56.758.955.853.653.552.651.650.750.0
Central Government’s PPG debt (in percent)52.053.751.350.050.650.449.949.549.1
Share of foreign currency debt (in percent)80.981.172.272.171.169.968.468.668.6
External sector(in millions of USD; unless otherwise indicated)
Exports of goods and services3,5014,3124,7004,9635,1825,4845,8286,2356,636
Imports of goods and services-4,517-5,723-6,647-6,887-7,151-7,505-7,911-8,343-8,841
Exports of goods and services (percent change)11.623.29.05.64.45.86.37.06.4
Imports of goods and services (percent change)2.226.716.13.63.85.05.45.56.0
Current account balance (in percent of GDP)-2.1-3.0-9.4-8.0-7.9-7.5-7.1-6.4-6.0
FDI (net)263222247296318341369399440
Gross international reserves2,2042,3142,2592,3572,3632,4052,4572,6462,669
Import cover 1/4.64.23.94.03.83.63.53.63.4
End-of-period exchange rate (dram per USD)484484484
Average exchange rate (dram per USD)480483483
Sources: Armenian authorities, and IMF staff estimates and projections.

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

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

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

Other Resources Citing This Publication