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Global Insight
July 1, 2011
IMF Commends Armenian Macroeconomic Policy in Programme Review
BYLINE: Venla Sipila
The Executive Board of the International Monetary Fund (IMF) has
completed its second review of Armenia's performance of the current
assistance programme, funded by the Extended Fund Facility (EFF) and
the Extended Credit Facility (EDF) arrangements. On completing the
review, the Board commended the Armenian authorities for their prudent
fiscal policy and timely and effective monetary policy. In particular,
the directors noted that the monetary authorities' efforts to actively
manage liquidity have resulted in increased feed-through of policy
rate moves to market interest rates, thus improving effectiveness of
monetary policy. The Fund notes that these appropriate policies have
helped the economy recover from the recent global crisis. Armenia
still faces several challenges, however, which necessitate decisive
implementation of suitable policies also going forward. Among other
things, the Fund also reiterates the importance of continued efforts
to implement reforms in fiscal administration. Challenges also remain
in containing rapid inflation and the persisting external and fiscal
deficits, high dollarisation, and increased public debt and poverty.
Significance:The completion of the review allows for Armenia to
withdraw a disbursement of SDR36.2 million (special drawing rights,
some USD57.8 million), bringing total withdrawals under the current
arrangement to SDR 108.6 million. The three-year programme totals
SDR266.8 million, and the first review of this was concluded in
December (seeArmenia: 2 December 2010:). Given Armenia's fairly good
performance under its IMF-supported programmes, and, in particular,
the positive staff assessment following their recent visit to Armenia,
the positive Board decision was expected (seeArmenia: 18 April 2011:).
Continued good relations with the IMF are important for Armenia, given
that its external financing needs, compared to its current
foreign-exchange earnings capacity, are still substantial.
From: Baghdasarian
July 1, 2011
IMF Commends Armenian Macroeconomic Policy in Programme Review
BYLINE: Venla Sipila
The Executive Board of the International Monetary Fund (IMF) has
completed its second review of Armenia's performance of the current
assistance programme, funded by the Extended Fund Facility (EFF) and
the Extended Credit Facility (EDF) arrangements. On completing the
review, the Board commended the Armenian authorities for their prudent
fiscal policy and timely and effective monetary policy. In particular,
the directors noted that the monetary authorities' efforts to actively
manage liquidity have resulted in increased feed-through of policy
rate moves to market interest rates, thus improving effectiveness of
monetary policy. The Fund notes that these appropriate policies have
helped the economy recover from the recent global crisis. Armenia
still faces several challenges, however, which necessitate decisive
implementation of suitable policies also going forward. Among other
things, the Fund also reiterates the importance of continued efforts
to implement reforms in fiscal administration. Challenges also remain
in containing rapid inflation and the persisting external and fiscal
deficits, high dollarisation, and increased public debt and poverty.
Significance:The completion of the review allows for Armenia to
withdraw a disbursement of SDR36.2 million (special drawing rights,
some USD57.8 million), bringing total withdrawals under the current
arrangement to SDR 108.6 million. The three-year programme totals
SDR266.8 million, and the first review of this was concluded in
December (seeArmenia: 2 December 2010:). Given Armenia's fairly good
performance under its IMF-supported programmes, and, in particular,
the positive staff assessment following their recent visit to Armenia,
the positive Board decision was expected (seeArmenia: 18 April 2011:).
Continued good relations with the IMF are important for Armenia, given
that its external financing needs, compared to its current
foreign-exchange earnings capacity, are still substantial.
From: Baghdasarian