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IMF says Armenia's foreign funding and domestic credit pick up, and
nonperforming loans decline
YEREVAN, May 4. / ARKA /. Strong post-crisis recovery in the Caucasus
and Central Asia (CCA) region is expected to continue in 2011,
although at a somewhat slower pace than in 2010, the International
Monetary Fund (IMF) said in its Regional Economic Outlook for Caucasus
and Central Asia released Tuesday.
Restoring banking system health remains a key priority for the region,
the report says. It says in Armenia banks' profitability is
recovering, foreign funding and domestic credit have picked up, and
nonperforming loans have declined, the report says.
According to the report, average growth across the region this year is
expected to remain strong, at just below 6 percent, compared with 6½
percent last year. Growth will continue to be driven by positive
external factors - high commodity prices, the pickup in Russia, and
strong growth in China.
The report says also the headline inflation has sharply risen in the
CCA, as in other parts of the world Consumer price inflation in the
region reached 11 percent on average in February, up from about 6
percent a year ago. This can be explained mainly by the rising cost of
food, which makes up more than 50 percent of consumption baskets in
the region.
The report says with global food and fuel prices expected to rise by a
further 15-18 percent in 2011, inflationary pressures are projected to
continue, with headline inflation rising further in the months ahead.
Experience suggests that higher food and fuel prices will eventually
pass through into general price inflation, if governments and central
banks do not respond. Central banks are already tightening monetary
policy, and may need to do so more forcefully to contain inflation.
And fiscal policy needs to remain prudent and support
anti-inflationary efforts
In Kazakhstan, the Kyrgyz Republic, and Tajikistan, where the share of
nonperforming loans remains particularly high, authorities will need
to put in place comprehensive resolution strategies. Greater
competition would also help develop stronger banking systems, most
notably in Tajikistan, Turkmenistan, and Uzbekistan, where directed
lending continues to crowd out development of credit to the private
sector. Dollarization, which rose with the crisis, remains a risk, and
supervisors need greater autonomy, independence, and legal protection
to do their jobs properly.
The report recommends that, over the long term, the region's
policymakers should seek to create jobs and reduce poverty by working
toward: developing adequate safety nets; increasing the role of the
private sector; diversifying economies away from natural resources;
achieving greater regional synergies; and improving the business
environment through enhanced transparency, governance and
institutional quality.
According to 2011 Armenian budget, the economy is expected to grow by
4.6% and the inflation is expected to vary between 4% (±1.5%). -0-
From: A. Papazian
nonperforming loans decline
YEREVAN, May 4. / ARKA /. Strong post-crisis recovery in the Caucasus
and Central Asia (CCA) region is expected to continue in 2011,
although at a somewhat slower pace than in 2010, the International
Monetary Fund (IMF) said in its Regional Economic Outlook for Caucasus
and Central Asia released Tuesday.
Restoring banking system health remains a key priority for the region,
the report says. It says in Armenia banks' profitability is
recovering, foreign funding and domestic credit have picked up, and
nonperforming loans have declined, the report says.
According to the report, average growth across the region this year is
expected to remain strong, at just below 6 percent, compared with 6½
percent last year. Growth will continue to be driven by positive
external factors - high commodity prices, the pickup in Russia, and
strong growth in China.
The report says also the headline inflation has sharply risen in the
CCA, as in other parts of the world Consumer price inflation in the
region reached 11 percent on average in February, up from about 6
percent a year ago. This can be explained mainly by the rising cost of
food, which makes up more than 50 percent of consumption baskets in
the region.
The report says with global food and fuel prices expected to rise by a
further 15-18 percent in 2011, inflationary pressures are projected to
continue, with headline inflation rising further in the months ahead.
Experience suggests that higher food and fuel prices will eventually
pass through into general price inflation, if governments and central
banks do not respond. Central banks are already tightening monetary
policy, and may need to do so more forcefully to contain inflation.
And fiscal policy needs to remain prudent and support
anti-inflationary efforts
In Kazakhstan, the Kyrgyz Republic, and Tajikistan, where the share of
nonperforming loans remains particularly high, authorities will need
to put in place comprehensive resolution strategies. Greater
competition would also help develop stronger banking systems, most
notably in Tajikistan, Turkmenistan, and Uzbekistan, where directed
lending continues to crowd out development of credit to the private
sector. Dollarization, which rose with the crisis, remains a risk, and
supervisors need greater autonomy, independence, and legal protection
to do their jobs properly.
The report recommends that, over the long term, the region's
policymakers should seek to create jobs and reduce poverty by working
toward: developing adequate safety nets; increasing the role of the
private sector; diversifying economies away from natural resources;
achieving greater regional synergies; and improving the business
environment through enhanced transparency, governance and
institutional quality.
According to 2011 Armenian budget, the economy is expected to grow by
4.6% and the inflation is expected to vary between 4% (±1.5%). -0-
From: A. Papazian