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© 2022 International Monetary Fund
WP/23/4
IMF Working Paper
Middle East and Central Asia Department
Supporting Sustainable Financing and Access to Finance in Armenia
Prepared by Maria Atamanchuk and Kiichi Tokuoka*
Authorized for distribution by Nathan Porter
January 2023
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: In Armenia, both external and domestic financing face challenges. Armenia’s share of inward foreign direct investment (FDI) in private external financing has declined significantly over the past decade. Access to domestic finance in Armenia is also moderate and masks important disparities. Against this background, this paper analyses the determinants of inward FDI and examines the impediments to increasing access to domestic finance. The paper confirms empirically that governance-related structural factors have a significant impact on inward FDI. Similar structural factors, informality and poor accounting practices are reported among major challenges for increasing access to finance for firms in Armenia. This paper finds that to improve financing in Armenia include: implementing structural reforms to improve the business environment, maintaining prudent macroeconomic policies, strengthening financial reporting, and improving financial inclusion through reduced informality in the economy.
| JEL Classification Numbers: | F21, G30, G53 |
| Keywords: | Inward FDI; access to finance; financial inclusion |
| Author’s E-Mail Address: | matamanchuk@imf.org; kiichi.tokuoka@gmail.com |
| JEL Classification Numbers: | F21, G30, G53 |
| Keywords: | Inward FDI; access to finance; financial inclusion |
| Author’s E-Mail Address: | matamanchuk@imf.org; kiichi.tokuoka@gmail.com |
Title Page
WORKING PAPERS
Supporting Sustainable Financing and Access to Finance in Armenia
Prepared by Maria Atamanchuk and Kiichi Tokuoka1
Table of Contents
I. Introduction
II. Context: External and Domestic Financing in Armenia
Changing Nature of Private External Financing in Armenia
Access to Domestic Financing
III. Determinants of Inward FDI and Implications of Declining Inward FDI
IV. Policy Implications
V. Conclusions
Appendix
References