IMF ISSUES LOANS TO ARMENIA DUE TO "MILD" POLICY ON TURKEY, KARABAKH
Haykakan Zhamanak
Nov 13 2009
Armenia
The International Monetary Fund (IMF) continues to provide loans
to Armenia due to Armenia’s "mild" position in the process of
normalization of Armenian-Turkish relations and the Nagornyy Karabakh
settlement although the Armenian government violates a condition for
the provision of IMF loans.
The Armenian government has broken one of the "important conditions"
for the provision of IMF loans to Armenia, which is that the Armenian
government should stay committed to its policy of floating exchange
rate of the Armenian national currency dram, the paper said. Instead,
the Armenian government spent about 700m dollars from its foreign
reserves to keep the dram stable at the end of 2008 and beginning of
2009, the paper quoted the IMF’s permanent representative to Armenia,
Nienke Oomes, as telling a news conference in Yerevan on 12 November.
The paper said the move could have been a basis for the aggravation of
relations between Armenia and the IMF. However, after a 480m-dollar
IMF loan had been spent to replenish Armenia’s foreign reserves,
the IMF decided on 30 October to provide Armenia with an additional
60m-dolalr loan, Nienke Oomes told the news conference.
Armenia’s Central Bank has spent 180m dollars to keep the exchange rate
stable within the past couple of months, and the bank was carrying
out another 3.5m-dollar intervention at the moment Oomes was holding
the news conference, Haykakan Zhamanak said in a separate report on
13 November. Oomes told the news conference that the IMF criticized
the government, but not in public, and added she was trying to
convince the Armenian authorities not to carry out interventions in
January-March 2009, but in vain, Haykakan Zhamanak reported. The IMF
and international financial organizations, in general, are supporting
the Armenian authorities in their best way "exclusively in exchange
for [Armenia’s] ‘mild’ position displayed in the improvement of
Armenian-Turkish relations and the issue of the Karabakh settlement",
the paper quoted unnamed pro-government experts as saying. The experts
believe that the IMF is carrying out a "risk-free" test on Armenia.
"Even if the test is not successful, Armenia will owe the IMF money
and will depend on it even more," Haykakan Zhamanak reported.
Armenia’s Central Bank announced on 3 March 2009 that it would be
guided by a floating dram exchange rate from that time on, with the
dram depreciating by 22 per cent within one day alone. The World
Bank’s Armenia office welcomed the depreciation of the dram and the
International Monetary Fund announced the provision of a 540m-dollar
loan to Armenia, Haykakan Zhamanak reported on 4 March. The paper
opined that the shift to the floating exchange rate was "primarily to
the benefit of oligarchs" and was an attempt to "create an illusion
of stability so that ahead of the 1 March [opposition] rally people
do not understand what disaster will come". Interventions worth 600m
dollars were made in the domestic market out of only 1.6bn dollars of
Armenia’s foreign reserves in order to maintain 305 drams per dollar
exchange rate, Haykakan Zhamanak reported on 4 March. The chairman
of the country’s Central Bank, Artur Javadyan, said on 3 March that
the dram exchange rate would be 360-380 drams per dollar in 2009,
Haykakan Zhamanak reported on 4 March.