IMF FORECASTS 15 PERCENT CONTRACTION FOR ARMENIAN ECONOMY

Agence France Presse
September 16, 2009 Wednesday 3:57 PM GMT
YEREVAN, Sept 16 2009

Armenia’s economy is expected to contract by 15 percent this year
as the ex-Soviet republic struggles with the global economic crisis,
an International Monetary Fund official said Wednesday.

"2009 has been a very challenging year for Armenia, with real GDP
(gross domestic product) now expected to decline by about 15 percent,"
the head of an IMF mission to Armenia, Mark Lewis, told a press
conference.

"In a difficult global environment, these developments have led to
some weakening in the balance of payments and public finances, and
posed additional hardships on the Armenian population," he said.

A significant drop in tax revenues could see Armenia’s budget deficit
rise to about 7.5 percent of GDP, he added.

Isolated Armenia has been among the countries hardest hit by the
global recession, especially as remittances from Russia have fallen
sharply in a severe downturn there.

Armenia’s economy shrank by 18 percent in the first seven months of
this year, according to official figures.

The IMF in March agreed to provide Armenia with a 540-million-dollar
(368-million-euro) loan to deal with the effects of the crisis.

Lewis also said plans for the Armenian-Turkish border to re-open
would give the country’s economy a boost.

"Opening the border will lead to a decrease in transport charges that
will in turn increase the competitiveness of Armenian companies. The
price of imported goods will also decrease, increasing the purchasing
capacity of the country’s population," he said.

Armenia and Turkey announced last month that they had agreed a
framework to establish diplomatic ties and re-open their border.

The two countries said they would hold internal political consultations
for six weeks before submitting to their parliaments two protocols
on establishing diplomatic ties and developing bilateral relations.

Armenia and Turkey currently have no diplomatic relations, a closed
border and a long history of hostility rooted in massacres of Armenians
under the Ottoman Turks during World War I.