IMF ASSESSES THE MEDIUM-TERM ECONOMIC OUTLOOK IN ARMENIA AS POSITIVE
armradio.am
27.11.2007 14:25
The Executive Board of the International Monetary Fund (IMF)
has completed the fifth review of Armenia’s economic performance
under the three-year Poverty Reduction and Growth Facility (PRGF)
arrangement.The Executive Board also approved a request for modifying
the end-December 2007 structural performance criterion on the tax
filing process. The completion of the review enables the release of
an amount equivalent to SDR 3.28 million (about US$5.2 million) under
the arrangement, bringing the total amount drawn under the arrangement
to an amount equivalent to SDR 19.68 million (about US$31.4 million),
IMF External Relations Department informs.
The PRGF is the IMF’s concessional facility for low-income countries.
PRGF-supported programs are based on country-owned poverty reduction
strategies adopted in a participatory process involving civil
society and development partners and articulated in the country’s
Poverty Reduction Strategy Paper. This is intended to ensure that
PRGF-supported programs are consistent with a comprehensive framework
for macroeconomic, structural, and social policies to foster growth
and reduce poverty. PRGF loans carry an annual interest rate of 0.5
percent and are repayable over 10 years with a 5½ -year grace period
on principal payments.
Following the Executive Board’s discussion on Armenia,
Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair,
stated: "Armenia continues to benefit from a double-digit rate of
growth, moderate inflation, a low fiscal deficit, and a comfortable
reserves position. Moreover, good progress has been made in reducing
poverty. Strong remittance inflows have dampened the impact of rapidly
rising imports on the current account deficit. The medium-term outlook
is positive, with a favorable outlook for investment.
"Sound fiscal and monetary policies will remain key to macroeconomic
stability and external competitiveness, against the background of
large-scale foreign exchange inflows and rising inflationary risks. The
Central Bank of Armenia is committed to tightening monetary policy to
keep inflation low, while maintaining a flexible exchange rate regime.
"Emerging expenditure pressures associated with pension reform and
a potential hike in gas import prices create medium-term fiscal
risks, calling for improved revenue mobilization and expenditure
prioritization. Increasing the tax-to-GDP ratio in a transparent and
nondiscretionary manner will be particularly important, to provide
resources for the country’s infrastructure needs and efforts to reduce
poverty further.
"The authorities intend to press ahead with their structural
reform agenda to remove remaining bottlenecks to broad-based
growth. Policies aimed at boosting domestic competition and
productivity are essential to improve external competitiveness. The
tax administration modernization program will contribute to reducing
tax evasion and strengthening the business environment," Mr. Kato said.
–Boundary_(ID_pxiJgWECwEjN/swoBSr2QA)–