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IMF CONCLUDES ARMENIAN MISSION ON A POSITIVE NOTE
by Venla Sipila
Global Insight
March 29, 2012
An International Monetary Fund (IMF) mission has concluded its visit
to Armenia, where it conducted discussions for the fourth review of
its current arrangements with the country. The IMF staff noted that
Armenian policy performance during the second half of 2011 remained
well on track in relation to the programme goals. In particular,
they commended the strengthened fiscal situation; the authorities
have shown prudence related to borrowing, while a significant
improvement in tax collection is expected for this year. The Fund
staff noted considerable progress towards setting the stage for a
more effective and business-friendly tax administration. They also
commended the Armenian officials on their progress in formulating a
tax policy strategy, in further strengthening the inflation targeting
policy framework, consolidating financial stability and boosting
the effectiveness of the provision of social services. On the other
hand, IMF staff also noted that even if the external balances have
strengthened, both as a result of fiscal restraint as well as strong
growth of exports and remittances, the current account deficit remains
wide enough to signal marked vulnerabilities, and thus in need of
further adjustment. An understanding on a policy framework for 2012 was
reached, and on the basis of this, a completion of the Fourth Review
of Armenia's Extended Credit Facility (ECF) and Extended Fund Facility
(EFF) programmes by the IMF's Executive Board could be expected in May.
Significance:Approval by the Board would allow for disbursement of
the fourth tranche of credit, the planned installment of around
USD56 million bringing total disbursements under the three-year
arrangement, first approved in June 2010, to USD279 million. The
IMF completed the third review of the programme in December, when
a disbursement of around USD56 million had been released. The now
published staff assessment is encouraging particularly regarding
progress in tax reform and fiscal administration. Improved fiscal
management has remained one of key goals throughout Armenia's
IMF-assisted transition path. Improvement in tax revenue collection
is crucial for suppressing the size of the shadow economy, as well
as for creating fiscal means for reducing poverty and encouraging
private sector business development.
by Venla Sipila
Global Insight
March 29, 2012
An International Monetary Fund (IMF) mission has concluded its visit
to Armenia, where it conducted discussions for the fourth review of
its current arrangements with the country. The IMF staff noted that
Armenian policy performance during the second half of 2011 remained
well on track in relation to the programme goals. In particular,
they commended the strengthened fiscal situation; the authorities
have shown prudence related to borrowing, while a significant
improvement in tax collection is expected for this year. The Fund
staff noted considerable progress towards setting the stage for a
more effective and business-friendly tax administration. They also
commended the Armenian officials on their progress in formulating a
tax policy strategy, in further strengthening the inflation targeting
policy framework, consolidating financial stability and boosting
the effectiveness of the provision of social services. On the other
hand, IMF staff also noted that even if the external balances have
strengthened, both as a result of fiscal restraint as well as strong
growth of exports and remittances, the current account deficit remains
wide enough to signal marked vulnerabilities, and thus in need of
further adjustment. An understanding on a policy framework for 2012 was
reached, and on the basis of this, a completion of the Fourth Review
of Armenia's Extended Credit Facility (ECF) and Extended Fund Facility
(EFF) programmes by the IMF's Executive Board could be expected in May.
Significance:Approval by the Board would allow for disbursement of
the fourth tranche of credit, the planned installment of around
USD56 million bringing total disbursements under the three-year
arrangement, first approved in June 2010, to USD279 million. The
IMF completed the third review of the programme in December, when
a disbursement of around USD56 million had been released. The now
published staff assessment is encouraging particularly regarding
progress in tax reform and fiscal administration. Improved fiscal
management has remained one of key goals throughout Armenia's
IMF-assisted transition path. Improvement in tax revenue collection
is crucial for suppressing the size of the shadow economy, as well
as for creating fiscal means for reducing poverty and encouraging
private sector business development.