ARMENIA GDP TO CONTRACT 9.5 PCT IN ’09 -IMF
By Hasmik Lazarian
Reuters
June 24 2009
UK
YEREVAN, June 24 (Reuters) – GDP in Armenia is projected to contract
9.5 percent in 2009, the International Monetary Fund said on Wednesday,
revising an earlier forecast of 5.0 percent.
The IMF on Monday approved an increase in lending to the former Soviet
republic by $283 million to $823 million, citing a sharp contraction
in economic activity, falling remittances, an increase in unemployment
and difficult conditions in credit markets.
‘We project GDP growth for 2009 to be minus 9.5 percent, but there
is a lot of uncertainty and the actual growth could be better or
worse depending on what happens to the world economy and in Russia
particularly,’ IMF resident representative Nienke Oomes told Reuters
on Wednesday.
After a period of strong economic growth, landlocked Armenia has
been hit hard by the global economic crisis and the impact of close
economic ally Russia sliding into recession.
In March, the Fund approved a $540 million standby loan arrangement
over 28 months to support the country’s 2009-2011 financing gap and
a drop in foreign exchange reserves. It followed the central bank’s
decision to float the dram currency.
GDP contracted 15.7 percent in January-May 2009 in comparison with 9.8
percent growth in the same period last year, the National Statistics
Service said this month. The central bank has forecast a contraction
of 5.8 percent this year, citing falling chemical and metal prices
on world markets.
‘We project a budget deficit of minus 6.5 percent because there is a
big drop in tax revenues,’ Oomes said, adding that the IMF programme
allows the government to maintain expenditures at a level ‘close to
the 2009 budget’.
‘We believe that during this time of crisis it is appropriate for
the government to increase the deficit to stimulate the economy and
to provide fiscal stimulus while protecting social spending for the
poor,’ Oomes said.
(Writing by Matt Robinson; editing by Stephen Nisbet) Keywords:
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