IMF has highlighted growing water resource scarcity and infrastructure problems in Armenia

YEREVAN, September 5. /ARKA/. Armenia is facing increasing water resource scarcity due to rising demand, inefficient water use, particularly in irrigation, and climate factors. This is stated in the International Monetary Fund's report "Armenia: Climate Policy Diagnostic - July 2026," published on September 3, 2026.

The IMF assesses that despite progress in legal and institutional reforms, their implementation remains hampered by a fragmented governance system, weak coordination, insufficient monitoring systems, and limited technical capacity.

The Fund notes that the irrigation, water supply, and sanitation sectors are characterized by deteriorating infrastructure and low efficiency.

Furthermore, according to the report, current tariffs are significantly below cost-recovery levels. According to the IMF, this leads to a significant fiscal burden, insufficient investment, and unsatisfactory service delivery.

The IMF prioritizes completing ongoing reforms to the Water Code and sector strategies, strengthening economic instruments, including tariffs and permit fees, improving interagency coordination and regulatory oversight, and increasing cost recovery.

In its June Economic Review of Armenia, the IMF forecast the state budget deficit in 2026 at 4% of GDP, compared to the 4.5% of GDP projected in the original budget. The IMF estimates that gross central government debt will amount to approximately 48.7% of GDP. The IMF emphasizes the need to maintain a balance between expenditure priorities and fiscal sustainability.