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States News Service
September 27, 2012 Thursday
STATEMENT ON THE CONCLUSION OF AN IMF STAFF MISSION TO ARMENIA
WASHINGTON
The following information was released by the International Monetary Fund:
An IMF mission led by Mark Horton visited Yerevan during September 518
to conduct discussions for the Fifth Review of the Extended Fund
Facility/Extended Credit Facility arrangements and the 2012 Article IV
consultations. After return to IMF headquarters, Mr. Horton made the
following statement:
Macroeconomic conditions have continued to improve over the past year.
With a positive harvest and dynamic mining and services sectors,
growth is expected to reach 6.2 percent in 2012 and to moderate to 4.3
percent in 2013, as the economy returns to trend and given conditions
in Europe and Russia. Inflation remains moderate, driven by the
agricultural rebound and a sound policy framework, and is expected to
remain within the target band (41.5 percent) of the Central Bank of
Armenia (CBA) during the rest of 2012 and in 2013.
Program performance remains broadly satisfactory. The fiscal balance
has continued to improve, with the deficit expected to decline to
about 2 percent of GDP in 2012, and to increase moderately to 2.6
percent next year as large capital projects are implemented.
The CBA has shown strengthened commitment to a flexible exchange rate
and the inflation-targeting regime. The CBA continues to improve its
monetary policy tools and its monitoring of risks, particularly those
associated with foreign currency lending. An external shock beginning
in the second quarter of 2012 led to sizeable intervention in the
foreign exchange market to prevent excessive volatility, and the
end-June performance criterion on reserves was missed. A waiver and
corrective actions will be needed to complete the Fifth Review.
Structural reforms are progressing, although at a
slower-than-desirable pace. A level playing field for all
businessesincluding in the key area of tax administrationwould be an
important breakthrough for the business environment. The mission looks
forward to the first results of the Regulatory Guillotine project,
which aims at substantially streamlining regulation and red-tape, and
to ongoing enforcement actions by the Competition Committee.
The mission reached preliminary agreement on a policy framework for
the rest of 2012 and 2013 that could form the basis for completion of
the review. The IMF Board is tentatively scheduled to consider the
review in early December. Upon approval, the IMF would disburse US$52
million, bringing total disbursements under the EFF/ECF to about
US$327 million.
The authorities expressed strong interest in a follow-up IMF
arrangement, after the current program concludes in mid-2013, and
possibly covering the next 3 years. They noted that a new program
would provide policy support for continued external and fiscal
adjustment, strengthened policy buffers and fiscal space, and
growth-enhancing structural reforms during a period of elevated
repayment of crisis-related assistance. Before discussions on a new
Fund program can begin, the IMF Board should consider the findings of
an Ex Post Assessment (EPA) of Fund programs since 2005, when the last
EPA was completed. The findings of the EPA, now under preparation,
will also help guide design of the new program.
The mission met with Prime Minister Tigran Sargsyan, Minister of
Finance Vache Gabrielyan, Central Bank Governor Arthur Javadyan,
Minister of Economy Tigran Davtyan, Minister of Energy and Natural
Resources Armen Movsisyan, Minister of Transport Gagik Beglaryan, as
well as senior government officials, representatives of the
international community, the banking and business sectors, and civil
society. The mission would like to thank the authorities and other
Armenian representatives for their warmth and hospitality.
September 27, 2012 Thursday
STATEMENT ON THE CONCLUSION OF AN IMF STAFF MISSION TO ARMENIA
WASHINGTON
The following information was released by the International Monetary Fund:
An IMF mission led by Mark Horton visited Yerevan during September 518
to conduct discussions for the Fifth Review of the Extended Fund
Facility/Extended Credit Facility arrangements and the 2012 Article IV
consultations. After return to IMF headquarters, Mr. Horton made the
following statement:
Macroeconomic conditions have continued to improve over the past year.
With a positive harvest and dynamic mining and services sectors,
growth is expected to reach 6.2 percent in 2012 and to moderate to 4.3
percent in 2013, as the economy returns to trend and given conditions
in Europe and Russia. Inflation remains moderate, driven by the
agricultural rebound and a sound policy framework, and is expected to
remain within the target band (41.5 percent) of the Central Bank of
Armenia (CBA) during the rest of 2012 and in 2013.
Program performance remains broadly satisfactory. The fiscal balance
has continued to improve, with the deficit expected to decline to
about 2 percent of GDP in 2012, and to increase moderately to 2.6
percent next year as large capital projects are implemented.
The CBA has shown strengthened commitment to a flexible exchange rate
and the inflation-targeting regime. The CBA continues to improve its
monetary policy tools and its monitoring of risks, particularly those
associated with foreign currency lending. An external shock beginning
in the second quarter of 2012 led to sizeable intervention in the
foreign exchange market to prevent excessive volatility, and the
end-June performance criterion on reserves was missed. A waiver and
corrective actions will be needed to complete the Fifth Review.
Structural reforms are progressing, although at a
slower-than-desirable pace. A level playing field for all
businessesincluding in the key area of tax administrationwould be an
important breakthrough for the business environment. The mission looks
forward to the first results of the Regulatory Guillotine project,
which aims at substantially streamlining regulation and red-tape, and
to ongoing enforcement actions by the Competition Committee.
The mission reached preliminary agreement on a policy framework for
the rest of 2012 and 2013 that could form the basis for completion of
the review. The IMF Board is tentatively scheduled to consider the
review in early December. Upon approval, the IMF would disburse US$52
million, bringing total disbursements under the EFF/ECF to about
US$327 million.
The authorities expressed strong interest in a follow-up IMF
arrangement, after the current program concludes in mid-2013, and
possibly covering the next 3 years. They noted that a new program
would provide policy support for continued external and fiscal
adjustment, strengthened policy buffers and fiscal space, and
growth-enhancing structural reforms during a period of elevated
repayment of crisis-related assistance. Before discussions on a new
Fund program can begin, the IMF Board should consider the findings of
an Ex Post Assessment (EPA) of Fund programs since 2005, when the last
EPA was completed. The findings of the EPA, now under preparation,
will also help guide design of the new program.
The mission met with Prime Minister Tigran Sargsyan, Minister of
Finance Vache Gabrielyan, Central Bank Governor Arthur Javadyan,
Minister of Economy Tigran Davtyan, Minister of Energy and Natural
Resources Armen Movsisyan, Minister of Transport Gagik Beglaryan, as
well as senior government officials, representatives of the
international community, the banking and business sectors, and civil
society. The mission would like to thank the authorities and other
Armenian representatives for their warmth and hospitality.