IMF: IMF EXECUTIVE BOARD COMPLETES THIRD REVIEW UNDER PRGF ARRANGEMENT FOR ARMENIA AND APPROVES US$4.9 MILLION DISBURSEMENT

International Monetary Fund (IMF)

Nov 23 2006

The Executive Board of the International Monetary Fund (IMF) has
completed the third review of the Republic of Armenia’s economic
performance under the Poverty Reduction and Growth Facility (PRGF)
arrangement.

The completion of the review enables Armenia to draw an amount
equivalent to SDR 3.28 million (about US$4.9 million), which will
bring total disbursements under the arrangement to the equivalent of
SDR 13.12 million (about US$19.5 million).

The Executive Board approved the three-year arrangement on May 25,
2005 (see Press Release No. 05/123) for a total amount equivalent to
SDR 23 million (about US$34.3 million) to support the government’s
economic program through 2008.

Following the Executive Board discussion, Mr. Takatoshi Kato, Deputy
Managing Director and Acting Chair, said:

"Armenia’s economy continues to perform well under its PRGF-supported
program. Prudent fiscal and monetary policies, large external inflows,
and ongoing structural reforms have contributed to double-digit
growth in a low inflation environment and to a sustained reduction
in poverty and unemployment. There has been impressive progress in
the areas of fiscal and financial sector reforms, including through
improved tax administration, strengthened prudential regulations and
oversight of the financial sector, and improved corporate governance
of banks. Looking ahead, the focus of the authorities’ policy will
be to manage the macroeconomic impact of continued large capital
inflows, and to boost tax revenue to finance expenditure increases
in infrastructure and social services.

"The authorities’ economic program for the remainder of 2006 and 2007
focuses on limiting inflationary pressures, maintaining a flexible
exchange rate arrangement, and improving tax revenue performance. The
draft 2007 budget is compatible with macroeconomic stability and
envisages a significant increase in tax revenues, which will be needed
to finance priority expenditures in infrastructure and social services.

"Continued fiscal and financial sector reforms remain key to sustaining
growth and reducing poverty. In the fiscal area, the authorities’
reform efforts will focus on broadening the tax base by reducing
exemptions and loopholes and on improving the predictability and
efficiency of tax administration. In the financial sector, reforms
in the period ahead will focus on improving corporate governance,
strengthening regulation and supervision, and deepening financial
intermediation, including through the development of the nonbank
financial sector," Mr. Kato said.

Contact: -MF EXTERNAL RELATIONS DEPARTMENT Public Affairs Media
Relations Phone: 202-623-7300 Phone: 202-623-7100 Fax: 202-623-6278
Fax: 202-623-6772