YEREVAN, March 10. /ARKA/. The Executive Board of the International Monetary Fund (IMF) has approved a 38-month SDR 82.21 million (about US$127.6 million, or 89.4 percent of Armenia’s quota) Extended Fund Facility (EFF) arrangement with the Republic of Armenia to support the authorities’ economic program, the IMF press office reported on Friday.
The approval enables the disbursement of about US$18.2 million (SDR 11.74 million), while the remaining amount will be phased over the duration of the program, subject to semi-annual program reviews.
The program aims to support a rebound in economic activity, further progress in poverty reduction, inflation stabilization, and a reduction in outstanding fiscal and external vulnerabilities.
“Armenia’s performance under the 2010–13 Extended Fund Facility and Extended Credit Facility arrangements was sound. However, growth and inflation remain volatile, the external current account deficit continues to be large, and poverty and unemployment are still high”, Ms. Nemat Shafik, Deputy Managing Director and Acting Chair, is quoted in the press release as saying after the Executive Board discussion on Armenia.
She said that the new 38-month extended arrangement with the Fund aims to support the authorities in addressing these challenges and to sustain Armenia’s access to international financial markets.
In her words, fiscal policy will play a central role in the program, supporting growth in 2014 and reducing the headline deficit over the rest of the program period to build up policy buffers.
“Delivering planned revenue gains and reducing under the execution of the public investment budget will be essential for successful implementation of the fiscal strategy,” Shafik said.
As another key measure in the fiscal area, she pointed out establishment of institutional structures to monitor and mitigate fiscal risks.
“Growth-enhancing structural reforms will also play a central role in the new program, given the objective of transforming Armenia into a dynamic emerging market,” she said. “In this context, smooth accession to the Eurasian Customs Union, along with continuing growth of trade and other links with the European Union, will be essential to achieve diversification of markets, products, financial flows, and investors.”
Shafikalso added that risks to the new program appear to be manageable, and Armenia’s repayment capacity remains robust.
About $410 million (SDR 266.80 million) has been provided to Armenia in accordance with two latest arrangements with IMF. -0----