By Shakeh Avoyan and Emil Danielyan
The chairman of the Armenian Central Bank, Tigran Sarkisian, said on Monday he expects the International Monetary Fund to unblock later this week $27 million in additional loans that were frozen one year ago over Yerevan’s poor tax collection.
Sarkisian said the fund’s Executive Board will discuss the fate of the second and third instalments of its $87 million Poverty Reduction and Growth Facility (PRGF) at a meeting in Washington on Wednesday. The three-year loan program, launched in May 2001, was designed to shore up the Central Bank’s hard currency reserves and thus contribute to continued macroeconomic stability in Armenia.
The board’s decision will be based on the final report of a senior IMF mission that visited Armenia in July. In a statement issued at the end of the trip, the mission said it “reached understandings” with the Armenian authorities on the terms of the disbursement of the delayed PRGF tranches.
“The mission noted the recent strong economic performance of the Armenian economy in 2001 and the first half of 2002, with real GDP growing at about 9 percent, annual inflation at around 3 percent, a comfortable level of foreign exchange reserves, and continued narrowing of the fiscal and current account deficits,” the statement read.
The IMF officials also welcomed a major improvement in Armenian tax collection in the second half of this year and praised the government for agreeing to IMF demands to reduce the number of imported goods exempted from value-added tax at the border.
The Armenian Ministry for State Revenues and the Customs Department collected 89 billion drams ($156 million) in aggregate revenues from January through June, which is 3 percent more than was projected by the government and 14 percent more than it collected in the first half of 2001.
Sarkisian said a positive decision by the IMF board would pave the way for the release of the World Bank’s new Structural Adjustment Credit (SAC-5) to Armenia worth more than $20 million. The money is due to cover over a quarter of the government’s 2002 budget. The government also hopes to secure another delayed tranche, the final $20 million installment of the bank’s previous SAC loan.
However, the World Bank’s disapproval of Armenia’s handling of the recent energy sector privatization may again hold up the release of the funds.