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IMF Official Praises Armenian Poverty Reduction Plan


By Emil Danielyan
A senior official from the International Monetary Fund endorsed on Thursday the Armenian government’s 12-year plan to dramatically reduce widespread poverty, saying that its ambitious targets are realistic.

“The Poverty Reduction Strategy Paper is an honest and sober assessment of the problem of poverty in Armenia,” James McHugh, the IMF’s resident representative in Yerevan, said. “But it’s much more than simply a list of problems that Armenia faces. It provides a roadmap over the medium term for confronting them.”

McHugh stressed that the plan “does not endanger macroeconomic stability” in Armenia because it puts the emphasis on continued economic growth which the government views as the primary source of its increased spending on social programs, education and health care. He also pointed to the government’s pledge to use its scarce resources more efficiently and said the PRDS “provides a framework for donor support over the medium term.”

The IMF official made the comments in a speech delivered at the official presentation of the PRDS attended by Prime Minister Andranik Markarian and several members of his cabinet. The plan, unveiled in August, envisages that the share of Armenia’s population living in poverty will gradually drop from the current 50 percent to 19 percent by 2015. The rate of “extreme poverty” is to be brought down from 16 percent to 4 percent by that time.

The government hopes to meet those targets through the creation of new jobs, improved tax collection and greater public spending. Sustained GDP growth, which hit a record-high rate of 14.9 percent in the first half of this year, will therefore be central to the success of the plan.

The PRDS forecasts a mid-term stable growth rate of at least 5.5 percent per annum. According to Finance and Economy Minister Vartan Khachatrian, the growth rate for the whole of 2003 will not fall below 9 percent.

“In recent years we have achieved considerable successes in the economic sphere,” Markarian said. “The Armenian economy is becoming more competitive and that will help us raise living standards.” He admitted that the number of Armenians living below the poverty line is “large” at the moment.

McHugh said the IMF, the World Bank and other Western donors will continue to support the government’s economic policies. In August, IMF he described Armenia’s first-half macroeconomic performance as “strong,” but said the release of its next $13 million loan to Yerevan is conditional on more government efforts to address “significant shortcomings” in the collection of taxes.
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