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Global Insight
February 6, 2013
IMF presents fairly positive Article IV assessment of Armenian
policies and reforms
by: Venla Sipila
The Executive Board of the International Monetary Fund (IMF) has
concluded its 2012 Article IV consultation with Armenia, and discussed
the Ex-Post assessment of Armenian performance in the Fund-supported
programmes. It also concluded the fifth review of Armenia's Extended
Fund Facility and Extended Credit Facility arrangements. The Board
commended Armenia's economic and financial policies, noting that these
have contributed to a sustained economic recovery since the 2009
crisis. Fiscal consolidation has progressed, helping to curb growth of
debt, and suppressing the wide current-account deficit. In addition,
the Board noted that the monetary policy stance was appropriate, as it
has kept inflation under control and managed to anchor inflation
expectations. The Fund directors also noted welcome progress in
structural reforms. However, in all of these key aspects of
transition, the Board also called for further progress. First, further
measures to strengthen fiscal revenues are necessary, especially given
the still high needs for social and investment spending. Second, the
monetary policy framework, including the monetary transmission
mechanism, needs to be further strengthened. The Fund also advocated
greater exchange rate flexibility as means of narrowing the
current-account gap. Third, further steps in structural reforms need
to include measures to strengthen governance and to improve the
business environment, competitiveness, as well as to support
diversification of exports.
Significance:The latest IMF assessment echoes its previous similar
statements, also supporting our current view of the Armenian economy;
the country has already achieved significant progress on its
transition path, but a considerable amount of work still needs to be
done. Further steps in improving the fiscal administration, in
particular, and in developing the monetary policy tools are important
so as to increase future growth potential and to secure macroeconomic
stability, and in order to create a competitive business environment.
A key area to tackle in the economy that is also related to all the
above-mentioned aspects of economic development is also the task of
curbing dollarisation. Armenian external financing needs are still
high, and its reform needs vast - thus, it is extremely important,
both regarding near-term liquidity and longer-term economic
development, that a good relationship with the IMF continues.
February 6, 2013
IMF presents fairly positive Article IV assessment of Armenian
policies and reforms
by: Venla Sipila
The Executive Board of the International Monetary Fund (IMF) has
concluded its 2012 Article IV consultation with Armenia, and discussed
the Ex-Post assessment of Armenian performance in the Fund-supported
programmes. It also concluded the fifth review of Armenia's Extended
Fund Facility and Extended Credit Facility arrangements. The Board
commended Armenia's economic and financial policies, noting that these
have contributed to a sustained economic recovery since the 2009
crisis. Fiscal consolidation has progressed, helping to curb growth of
debt, and suppressing the wide current-account deficit. In addition,
the Board noted that the monetary policy stance was appropriate, as it
has kept inflation under control and managed to anchor inflation
expectations. The Fund directors also noted welcome progress in
structural reforms. However, in all of these key aspects of
transition, the Board also called for further progress. First, further
measures to strengthen fiscal revenues are necessary, especially given
the still high needs for social and investment spending. Second, the
monetary policy framework, including the monetary transmission
mechanism, needs to be further strengthened. The Fund also advocated
greater exchange rate flexibility as means of narrowing the
current-account gap. Third, further steps in structural reforms need
to include measures to strengthen governance and to improve the
business environment, competitiveness, as well as to support
diversification of exports.
Significance:The latest IMF assessment echoes its previous similar
statements, also supporting our current view of the Armenian economy;
the country has already achieved significant progress on its
transition path, but a considerable amount of work still needs to be
done. Further steps in improving the fiscal administration, in
particular, and in developing the monetary policy tools are important
so as to increase future growth potential and to secure macroeconomic
stability, and in order to create a competitive business environment.
A key area to tackle in the economy that is also related to all the
above-mentioned aspects of economic development is also the task of
curbing dollarisation. Armenian external financing needs are still
high, and its reform needs vast - thus, it is extremely important,
both regarding near-term liquidity and longer-term economic
development, that a good relationship with the IMF continues.