IMF POSITIVELY EVALUATES RA GOVERNMENT’S 2007-12 PROGRAM

YEREVAN, JULY 3, NOYAN TAPAN. Marta Castello-Branco, the head of the
International Monetary Fund (IMF) delegation in Armenia from June 26,
at the July 2 press conference, said that the IMF positively evaluates
the circumstance that the RA government’s 2007-12 program pays much
attention to ensuring of high economic growth, poverty reduction, and
fighting corruption, while maintaining sound macroeconomic policy.

In her words, it is also important that the above mentioned program
attaches importance to the perfection of tax administration, avoiding
new tax exemptions, improving the quality and depth of financial
intermediation, as well as improving the business climate to downsize
the shadow economy, raise productivity, and maintain competitiveness.

M. Castello-Branco expressed satisfaction with the circumstance that in
the past period of the current year the GDP growth was stronger than
expected, tax collection was overperformed, and inflation was in line
with the CBA’s target.

It was mentioned that one of the current challenges of Armenia is to
keep inflation low under the conditions of fiscal pressures. As the IMF
official evaluated, among the above mentioned pressures are the grain
price hike, persistent large foreign exchange inflows, and higher
government spending envisaged in the second half-year of 2007 as
compared with the first one.

The IMF representative considered as positive the 15.2% index of
taxes/GDP envisaged by the 2007 RA state budget, with that index making
14.4% in 2006. Nevertheless, in M. Castello-Branco’s words, there is
much potential for increasing tax collection in Armenia: according to
her data, shadow economy in the country makes up 30%.