Armenia’s gross external financing requirements projected at about
US$1.6 billion for 2009

YEREVAN, March 9. /ARKA/. Armenia’s gross external financing
requirements are projected at about US$1.6 billion for 2009, and will
remain elevated through 2011, albeit with a slight downward trend,
International Monetary Fund’s Armenian resident office said in
connection with its Friday’s approval of US$540 Million Stand-By
Arrangement.

The office said that the Stand-By Arrangement will cover a large share
of the country’s 2009-2011 financing gap. Additional financing will be
provided by Armenia’s donors and international partners, including the
World Bank.

Besides, extra funds will be provided to other donors and international
partners, particularly World Bank and Russia.

Armenia will also receive $500 million from Russia and $525 million
from the World Bank. The IMF said that Armenian authorities’ program is
based on a consistent set of measures regarding exchange rate,
monetary, financial, and fiscal policies, as well as continued
structural reforms.

`Return to a flexible exchange rate regime. The Central Bank of Armenia
(CBA) announced on March 3 that it will no longer intervene in the
market, except to smooth extreme volatility, and raised its policy
interest rate by 100 basis points. Following the announcement, the dram
depreciated about 20 percent, and since then, has broadly remained in
that range’, the IMF press release says.

`Key aspects of the CBA’s policy response include liquidity support
operations, as needed, and enhanced banking supervision.’

As another key aspect, the IMF singled out the strengthening of the
financial sector to maintain stability and confidence.

The IMF said that the revision of fiscal priorities to maintain
macroeconomic stability, while protecting social outlays and public
investment, in light of the expected revenue shortfall.

It also said that the authorities intend to cut back on non-priority
spending while providing an increase in social spending of 0.3 percent
of GDP, relative to the budget, to protect the poor through
well-targeted social safety nets. `Additional external financing will
be used to boost public investment’, the press release says.

On Friday, the Executive Board of the International Monetary Fund (IMF)
approved a 28-month SDR 368 million (about US$540 million) Stand-By
Arrangement for Armenia to support the country’s program to adjust to
the deteriorated global outlook, restore confidence in the currency and
financial system, and protect the poor.

The approval makes the amount equivalent to SDR 161.5 million (about
US$237 million) immediately available and the remainder in nine
installments subject to quarterly reviews. The Stand-By Arrangement
entails exceptional access to IMF resources, amounting to about 400
percent of A
rmenia’s quota. It was approved under the Fund’s fast-track
Emergency Financing Mechanism procedures. M.V.-0—