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Fresh Loan Ends IMF Program In Armenia

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  • Fresh Loan Ends IMF Program In Armenia

    Radio Free Europe, Czech Rep.
    Dec 3 2004

    Fresh Loan Ends IMF Program In Armenia


    By Atom Markarian 03/12/2004 03:56

    The International Monetary Fund completed on Thursday a three-year
    lending program designed to sustain macroeconomic stability in
    Armenia with the disbursement of its final $13.7 million installment.


    The release of the sixth tranche of the $105.3 million Poverty
    Reduction and Growth Facility (PRGF) was announced by Armenian
    Finance Minister Vartan Khachatrian and Kames McHugh, the IMF
    representative in Yerevan. It was formally approved by the fund's
    governing board in Washington the previous night.

    The PRGF funds, first made available in May 2001, have been used by
    the Armenian Central Bank to maintain a stable exchange rate of the
    national currency, the dram, and alleviate the country's negative
    balance of payments. IMF officials said the scheme has served its
    purpose, praising the Armenian government for pursuing strict fiscal
    and monetary policies and reforming loss-making public utilities.

    The IMF's deputy executive director, Augustin Carstens, said in a
    statement that this "prudent" policy was key to a double-digit
    economic growth registered by the Armenian authorities last year. He
    urged them to stay the course.

    "This commitment to good economic policies has now started to bear
    results," McHugh told reporters in Yerevan. "Armenia now enjoys high
    economic growth, poverty indicators are starting to fall and living
    standards are beginning to rise."

    The IMF statement cautioned at the same time that Armenia's continued
    economic recovery is contingent on better governance. It noted in
    particular that the authorities must eliminate "arbitrary practices"
    in the collection of taxes and import duties -- a major source of
    complaints by local businessmen.

    Armenia's macroeconomic performance, which has still not had a
    serious impact on living standards, was also praised recently by the
    World Bank, its number one creditor. A statement by the bank
    described it as "exemplary."

    Khachatrian welcomed the donors' endorsement of his government's
    economic track record. He also announced that the government has
    decided to seek another three-year credit from the IMF despite the
    dram's dramatic strengthening against the U.S. dollar and Armenia's
    own hard currency reserves approaching $500 million.

    "We will implement another three-year [IMF] program," he said. "A
    political decision has already been taken."

    In an interview with RFE/RL last week, Khachatrian predicted that the
    Armenian growth will somewhat slow down but remain strong in the
    coming years.
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