Abstract
This paper discusses key findings of the Fourth Review Under the Poverty Reduction and Growth Facility for Armenia. Armenia’s economy performs strongly. All end-December 2006 quantitative and all but one structural performance criteria were observed. The main policy challenges are to broaden economic growth, raise tax revenues, and manage large foreign exchange inflows. Fiscal policy remains appropriate. Meeting the ambitious 2007 revenue target will require broadening the tax base and strengthening administration. The stance of monetary policy is appropriate.
The Executive Board of the International Monetary Fund (IMF) has completed the fourth review under the Poverty Reduction and Growth Facility (PRGF) arrangement for Armenia (see Press Release No. 05/123). The completion of the review, which was undertaken on a lapse of time basis,1 enables the release of a further SDR 3.28 million (about US$5 million) under the arrangement. This will bring the total amount drawn under the arrangement to SDR 16.4 million (about US$24.9 million).
The PRGF is the IMF’s concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in the country’s Poverty Reduction Strategy Paper. This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5½-year grace period on principal payments.
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The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.