Yerevan/Mediamax/. IMF Executive Board approved US$56.1mln disbursement to Armenia as of the third review of the country’s economic performance under a program supported by the Extended Fund Facility (EFF) and Extended Credit Facility (ECF).

The decision enables the Armenian authorities to draw an additional SDR 36.2 million (about US$56.1 million), bringing total disbursements under the arrangements to SDR 144.8 million (about US$224.3 million). The three-year SDR 266.8 million (about US$413.4 million) EFF and ECF arrangement with
Armenia was approved by the IMF’s Executive Board in 2010. Financing under the ECF carries a zero interest rate, with a grace period of 5.5 years, and a final maturity of 10 years.

Nemat Shafik, Deputy Managing Director expressed the content with the Armenian authorities’ monetary policy which helped underpin the moderation of inflation this year and the continuing post-crisis recovery.

IMF is also content with the decrease in the budget deficit in
2011, and further consolidation planned for 2012 and beyond which will ensure growth in debt sustainability by AMD 101bln (about USD 260mln).

The Fund underlines the necessity of structural reforms in Armenia. “Broad-based reforms should aim at enhancing the business environment and promoting competitiveness, greater productivity, and higher exports”, said Nemat Shafik stressing the need for “a decisive breakthrough” to reduce improve transparency and evenhandedness, and promote domestic competition.

The IMF notes that Armenia faces increasing downside risks from the global environment, which may exacerbate its existing vulnerabilities. While the ongoing fiscal adjustment and higher reserves targets have helped strengthen buffers, the elevated post-crisis public debt burden now limits policy space.  The IMF stresses the importance of timely and prudent policy responses on the authorities’ part to ensure greater exchange rate flexibility and steadfast progress to strengthen the business environment and increase competitiveness.