IMF COMPLETES THIRD REVIEW UNDER STAND-BY ARRANGEMENT FOR ARMENIA AND APPROVES $73.6 MILLION DISBURSEMENT

ARKA
March 30, 2010
Yerevan

YEREVAN, March 30, /ARKA/. The Executive Board of the International
Monetary Fund (IMF) completed March 29 the third review of Armenia’s
economic performance under a program supported by a Stand-By
Arrangement (SBA), a press release by IMF said.

It said the decision enables the immediate release of an amount
equivalent to SDR 48.485 million (about US$73.6 million), bringing
total disbursements so far an amount equivalent to SDR 350.425 million
(about US$532.2 million).

They Executive Board also approved a request for a waiver of
nonobservance of the end-December 2009 quantitative performance
criterion on the net domestic assets of the Central Bank of Armenia
(CBA).

The 28-month SBA was approved for an amount equivalent to a total
of SDR 368.0 million (about US$558.9 million) on March 6, 2009 ,
with a total amount of access augmented to an amount equivalent to
SDR 533.6 million (about US$810.4 million) on June 22, 2009.

Following the Executive Board’s discussion on Armenia, Mr. Murilo
Portugal, Deputy Managing Director and Acting Chair, stated:

"Armenia’s performance under its Stand-By Arrangement with the Fund has
been strong, and the economic recession appears to have bottomed out,
aided by supportive monetary and fiscal policies. The challenge remains
to support the fragile recovery, address external vulnerabilities,
and advance a credible fiscal consolidation plan over the medium term.

"Fiscal policy aims to continue to support the recovery, while
gradually starting fiscal consolidation in 2010. Social spending will
be protected. The authorities are committed to make good progress on
the reforms in tax policy and administration, as well as on public
expenditure and debt management.

"Monetary policy aims to move from an accommodative to a more neutral
stance, in order to head off potential inflation pressures. The
authorities are committed to a flexible exchange rate regime, and
aim to strengthen the monetary transmission mechanism to enhance the
effectiveness of monetary instruments, as well as improve the central
bank’s communication strategy. "The financial sector remains sound
and well capitalized, and the authorities have strengthened their
crisis preparedness and contingency planning frameworks. Further
reforms will be important to ensure continued resilience to risks.

"The authorities are committed to pursue broad-based structural
reforms to enhance productive capacity and promote long-term growth
through an open trade regime, an improved business environment,
better governance, and increased market competition in key sectors
of the economy," Mr. Portugal said.