NEW IMF PROGRAM ENVISAGES REDUCTION OF ARMENIA’S FINANCING

Noyan Tapan

Se p 16, 2008

YEREVAN, SEPTEMBER 16, NOYAN TAPAN. Based on the progress made in the
socioeconomic sphere so far, less financing will be provided to Armenia
by a new program of the International Monetary Fund (IMF) as compared
with the previous programs, the head of the IMF mission to Armenia
Marta Castello-Branco announced at the September 16 press conference.

In her words, under the previous three-year program of IMF that
finished in May 2008, Armenia achieved a two-digit economic growth,
a one-digit inflation and considerable poverty reduction. She said
that the new IMF program envisages providing assistance to Armenia
for improving administration and implementing tax policy reforms. The
purpose of the program is to make the fiscal policy a most efficient
instrument of demand management, strengthening the coordination of
work of the bodies dealing with fiscal and monetary-credit policies.

M. Castello-Branco announced the results of IMF studies on Armenia,
based on which Armenia ensured a stable GDP growth but inflation
pressures remain considerable. It was mentioned that so far the
conflict between Georgia and Russia has not had a negative impact
on the prospect of Armenia’s economic growth, and if the tension
is reduced, it will be possible to ensure 10% real growth. It is
expected that by late 2008 inflation will make 7.5% due to tightened
monetary-credit and fiscal policies, and the recent decline in
international food and fuel prices. According to IMF studies, the
sustainable economic growth will continue, while inflation will be
within the 4% target of the Central Bank of Armenia (CBA) within the
next few years.