IMF INCREASES FINANCIAL SUPPORT TO ARMENIA

ARKA
June 24, 2009

YEREVAN, June 24. /ARKA/. The International Monetary Fund (IMF)
has increase financial support to Armenia up to US $823mln.

IMF Resident Representative in Armenia Nienke Oomes reported that
the IMF Executive Board completed the first review of Armenia’s
economic performance under a Stand-By Arrangement (SBA) and approved
an increase in the IMF’s financial support to an amount equivalent to
SDR 533.6 million (about US$822.7 million; or 580 percent of Armenia’s
quota). These decisions enable the immediate release of SDR 102.7
million (about US$158.3 million), bringing the total disbursed to
SDR 264.2 million (about US$400 million). The Board also granted a
waiver of performance criteria on net banking system credit to the
government and the program’s fiscal balance.

She said that the funds will be provided for five years, with a
grace period of three years and three months, the SDR rate being
1.5%. About US $150mln of the funds will be repaid at the SDR rate,
the second US $150mln amount at the 1% + SDR rate and the following
amounts at the 2%+SDR rate.

The reason for the increased financial support to Armenia is a
worse financial situation in the country, lower GDP, sharp decline
in private transfers to Armenia, decreased tax revenues, which may
cause financial expenditure problems to the Government, Oomes said.

She pointed out that the increased financial support to Armenia is
supposed to prevent the Government from cutting down its expenditures,
which may worsen the situation amid the crisis.

The funds will help Armenia resist the crisis, restore the population’s
confidence in the national currency and protect the socially vulnerable
sections of the population.

Oomes said that Armenia and the IMF arranged about macroeconomic
policy, particularly about mitigating the macroeconomic and fiscal
policy and about reforms.

She pointed out that some of the funds will be used to replenish the
reserves of the Central Bank of Armenia (CBA). Under a preliminary
agreement, some of the funds will be provided to the Armenian
Government for social expenditure.

Under a program of cooperation with the RA Government, the IMF
has transferred US $240 to Armenia, with the rest US $300mln to be
transferred during the coming two years.