IMF PROVIDES 100M AID TO ARMENIA, 46M – TO GEORGIA

News.am
12:14 / 10/17/2009

The European Commission extends the macro-financial assistance of
~@100m to Armenia and ~@46 m for Georgia, EU press release reads
October 16.

The Commission proposed to the Council to provide macro-financial
assistance (MFA) to Armenia in the form of a loan of up to ~@65
million and a grant of up to ~@35m. The assistance will be provided
in two installments, tentatively in the first and fourth quarter
of 2010. The assistance will support the adjustment program agreed
between Armenia and the International Monetary Fund (IMF) to help
the country through the global crisis.

The global economic crisis started affecting Armenia in the last
quarter of 2008. As the country’s economic activity and external
situation deteriorated, Armenia agreed, in March 2009, a USD
540m Stand-By Arrangement program with the IMF. In the light of a
substantial worsening of the economic conditions, the IMF decided in
June 2009 to approve an increase of its resources by about USD 250m.

Armenia’s GDP is foreseen to decrease by 15.6% in 2009, the budget
deficit to reach 7.5% of GDP and the current account deficit to reach
13.7% of GDP. A slow recovery is expected in 2010. Other international
donors like the World Bank and the Asian Development Bank support
Armenia’s economic adjustment effort along with other bilateral donors,
the paper says.

The Commission also proposed ~@46m in grants to Georgia, also under
the European Union’s MFA program. The grant would be provided in two
installments, tentatively in the fourth quarter of 2009 and first
half of 2010. In the case of Georgia, the assistance is part of an
EU package of up to ~@500m to support Georgia’s economic recovery
in the aftermath of the conflict with Russia, and will support the
adjustment program agreed with the IMF.

According to EU, the military conflict with Russia and the impact of
the global crisis have severely affected the economic situation in
Georgia, which had previously enjoyed a strong growth performance. The
real GDP is expected to decline by 4% in 2009, about the same as the
EU average.