IMF: IMF EXECUTIVE BOARD COMPLETES SIXTH AND FINAL REVIEW UNDER THE PRGFARRANGEMENT WITH ARMENIA AND APPROVES $5US.4 MILLION DISBURSEMENT
M2 PressWIRE
May 20, 2008 Tuesday
The Executive Board of the International Monetary Fund (IMF) today
completed the sixth and final review of Armenia’s economic performance
under the Poverty Reduction and Growth Facility (PRGF) arrangement. The
completion of the review enables the release of an amount equivalent to
SDR 3.32 million (about $5US.4 million), bringing total disbursements
to the full amount of SDR 23 million (about $37US.3 million) under
the arrangement (see Press Release No. 05/123).
Following the Executive Board’s discussion, Mr. Murilo Portugal,
Deputy Managing Director and Acting Chair, said:
"Armenia’s adherence to prudent macroeconomic policies and the
progress made in structural reforms have contributed significantly
to its strong performance under its third PRGF arrangement. A marked
reduction in poverty has been achieved in a high-growth and low
inflation macroeconomic environment.
Strong remittance and foreign direct investment inflows have dampened
the impact of rapidly rising imports on the balance of payments. The
medium-term outlook remains positive in view of favorable investment
prospects.
"Continued sound fiscal and monetary policies remain key to maintaining
macroeconomic stability and external competitiveness, against
the background of large-scale foreign exchange inflows and upside
inflationary risks. A tighter-than-budgeted fiscal stance is warranted
for 2008 as this would deliver welcome support to monetary policy in
keeping inflation expectations well anchored. The existing monetary
policy framework, based on a flexible exchange rate, remains the best
option for Armenia. The authorities’ timely monetary policy actions
over the past year have demonstrated the authorities’ commitment to
price stability and helped contain inflationary expectations despite
strong headwinds from higher world food and energy prices.
"Strengthening the capacity for fiscal policy analysis will be
important for improving the effectiveness of fiscal policy and
helping maintain fiscal discipline. Increasing revenue collections
in a transparent and nondiscretionary manner will also be crucial,
in view of the need to improve the country’s infrastructure, reduce
poverty, and improve the business environment.
"The authorities intend to press ahead with their structural reform
agenda to remove remaining bottlenecks to broad-based growth and to
safeguard competitiveness. Future reform efforts will appropriately
focus on deepening productivity-enhancing structural reforms, notably
by reducing the cost of doing business, boosting domestic competition,
diversifying the economy, and discouraging participation in the
shadow economy.
"The IMF welcomes Armenia’s interest in continuing its close
cooperation with the Fund after the current PRGF arrangement expires
in May 2008," Mr. Portugal said.
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 5 -year grace period on principal payments.
CONTACT: Public Affairs, IMF External Relations Department Tel:
+1 202 623 7300 Fax: +1 202 623 6278 Media Relations, IMF External
Relations Department Tel: +1 202 623 7100 Fax: +1 202 623 6772
From: Emil Lazarian | Ararat NewsPress