By Atom Markarian and Emil Danielyan
A senior official from the International Monetary Fund offered on Friday a highly positive economic outlook for Armenia, saying that the IMF is encouraged by the latest official macroeconomic figures and has revised upwards its growth projections.
James McHugh, who is the fund’s new resident representative in Yerevan, also described as “realistic” the Armenian government’s draft budget for next year.
“The macroeconomic situation remains very favorable. The growth is being quite broadly based and we expect it to continue into next year,” McHugh told RFE/RL in an interview.
Government data show Armenia's Gross Domestic Product soaring by 11 percent in the first nine months of 2002 on the back of an even larger upswing in the construction and manufacturing sectors. The authorities also trumpeted a 46 surge in exports and continuing low inflation.
“The inflation rate by the end of the year should be well below the three percent target,” McHugh said. “Exports are growing very rapidly, and we expect the external deficit to narrow very significantly.”
According to McHugh, this macroeconomic performance has led the IMF to revise its 2002 growth projections for the Armenian economy from 7.5 to 9.5 percent. The IMF board of directors in Washington also praised the robust growth in early October when it announced its decision to release $26 million in additional loans to Armenia, frozen last year over poor tax collection.
The move followed a major increase in the Armenian government’s tax revenues this year. The government plans to boost them further next year. Hence, a 30 percent increase in state revenues and expenditures envisaged by its 2003 draft budget approved by ministers last week.
“The budget is realistic,” McHugh said, adding that its basic targets have been agreed with the IMF.
“The government has developed a budget that will address any uncertainties related to external financing,” he said, referring to “structural adjustment credits” (SAC) from the World Bank that cover a large part of Armenian budget deficits. “They are committed to clearing [expenditure] arrears and have agreed a list of contingency expenditures that, if all the financing comes in, they will execute.”
The bank has frequently delayed those loans following disagreements with the Armenian authorities.