Armenian government’s fiscal policy is supportive of meeting priority spending needs, while preserving debt sustainability-IMF
YEREVAN, December 23. /АРКА/. 'We see the government’s current fiscal policy as being supportive of meeting priority spending needs, while preserving debt sustainability, IMF Resident Representative in Armenia, Umang Rawat, said in an interview with the ARKA news agency.
According to him, the 2026 budget accommodates spending for refugee support, health, and public investment. At the same time, the budget deficit is smaller than in 2025, which 'we see as a first step toward somewhat lowering government debt over the medium term.'
He said maintaining room to spend money on social and economic priorities in the future will require additional revenue.
'Decisive reforms to expand the tax base, strengthen tax compliance, and reduce tax exemptions thus remain critical. An important ingredient of such reforms should be reducing tax exemptions, for instance those on electric vehicles that currently go mainly to the purchases of expensive luxury vehicles. We feel that instead any support to greening the fleet of vehicle in Armenia should be more targeted, for instance through a rebate program for small and midsized EVs and excludes the most expensive cars,' Mr. Rawat said.
According to him, the government’s policy to gradually limit mortgage tax exemptions is another example in the direction of limiting tax exemptions. More broadly, lowering the VAT registration threshold, which at AMD 115 million is high relative to comparators, remains a priority. Further strengthening the ability of the tax authority to collect taxes is also important in this regard, for example by improving the tax payment compliance.
He said to align spending with priority needs, it will be key to improve budget planning and expenditure management. The authorities have already taken important steps in this regard, for instance, by introducing a three-year budget planning horizon which allows for better planning and implementation of investment, e.g., in infrastructure. In turn, new schools, roads and other infrastructure stimulates the economy and hence makes the country and its citizens richer. 'Building capacity, especially in line ministries, to align their medium-term strategic priorities with the three-year budget would further strengthen medium-term planning. Finally, ongoing reforms in the Public Investment management framework are essential to improve execution and efficiency of public investment'
On December 4, 2025, the IMF approved a new 36-month Stand-By Arrangement (SBA) agreement with Armenia in the amount of 128.8 million SDRs (100% of Armenia's quota in the IMF, or about $175 million), which will assist the country's authorities in maintaining macroeconomic stability and advancing the program of structural reforms, as well as provide insurance in the face of uncertainty.
After the approval of Armenia, an amount equivalent to 18.4 million SDR (about $25 million) immediately became available. The remaining amount will be provided in equal tranches taking into account six semi-annual reviews.-0-
