ARMENIA’S ECONOMY TO GROW MORE THAN 2 PCT IN 2010 -IMF
By Hasmik Lazarian

Forex Pros
Feb 17 2010

YEREVAN, Feb 17 (Reuters) – Armenia’s economy should recover and grow
by more than 2 percent this year, the International Monetary Fund said
on Wednesday, but also urged the country to slash its fiscal deficit.

"After a very challenging year in 2009 output appears to have
stabilised and real GDP is expected to recover in 2010," Mark Lewis,
head of an IMF mission to Armenia, told reporters at the end of a
two-week visit to the country.

The former Soviet republic saw GDP contract 14.4 percent in 2009 due
to a sharp fall in remittances and exports, a slump in the construction
sector and a recession in close economic ally Russia.

The government forecasts only 1.2 percent economic growth this year.

Lewis said the mission would recommend the IMF board to approve the
next tranche of an $827 million loan facility approved last year,
which will be worth $74 million.

"We don’t anticipate any obstacles," Lewis said about the next
disbursement which is due in March.

The loan, initially of $540 million but topped up in June last year,
was secured in March after the Armenian central bank decided to float
the dram currency. Armenia has already received half of the money.

Lewis said the IMF recommends that Armenia get its fiscal deficit
down to 6 percent of GDP this year from 7.5 percent in 2009.

The Washington-based organisation expects annual inflation in Armenia
of 6 percent in 2010, Lewis said, down from 6.5 percent last year.

"With sound policies in place it (inflation) should return to the
target range in the near future," he said.The central bank targets
4 percent inflation, with a deviation of 1.5 percentage points.

The central bank on Tuesday raised its refinancing rate by 50 basis
points, its second such move this year, to 6 percent to try and get
inflation back within its target. (Reporting by Hasmik Lazarian;
writing by Margarita Antidze in Tbilisi, editing by Lidia Kelly,
Susan Fenton)