By Emil Danielyan
The managing director of the International Monetary Fund, Horst Koehler, made late Monday a highly positive endorsement of the difficult free-market reforms in Armenia, saying that its impoverished population will eventually feel their benefits if the country “stays the course.”
Ending a visit to Yerevan, Koehler said he was “very encouraged” by President Robert Kocharian’s and his government’s vision of economic development which was laid out to him earlier in the day. He described as “impressive” Armenia’s robust economic growth in recent years, but at the same time cautioned that it has been “rather narrowly based.” He also confirmed that the Armenian authorities will be rewarded with yet another IMF loan later this month.
“The country is on the right track and should just stay the course of reforms,” Koehler told a news conference. “I do think that it will pay off in the coming years. The right policy is now defined. It’s now an issue of implementation.”
Koehler’s praise followed similar remarks made by lower-level IMF officials in recent months. They have pointed to the Armenian government’s continuing tight fiscal and monetary policies and a strong macroeconomic performance. Still, the IMF head subscribed to the widely held belief that the growth has not led to a massive job creation in the unemployment-stricken nation.
“Too many people are in poverty, and that means there can’t be any kind of complacency. The reform process has to continue and the business climate has to improve further,” he said, adding that the authorities should also markedly improve revenue collection and fight corruption in earnest.
At least half of the country’s population still lives below the official poverty line. A mid-term poverty reduction program adopted by the government this summer envisages to cut that rate to just below 20 percent by 2015 through the creation of new jobs and a substantial increase in the currently modest public expenditures, on health, education and other social services. The government has also pledged to stimulate the struggling economy by cracking down on widespread graft within its own ranks.
Koehler said Kocharian outlined this strategy during their meeting. “I do think that this is a good approach and the IMF is fully committed to supporting it,” he said.
An anti-corruption plan approved by the Armenian cabinet last week has still not been disclosed to the public which remains cynical about the authorities’ commitment to good governance. Their political opponents claim that the regime is disinterested in the rule of law.
Koehler, meanwhile, further announced that the IMF’s executive board will disburse soon the fifth $14 million installment of its $95 Poverty Reduction and Growth Facility (PRGF), a three-year loan program designed to prop up macroeconomic stability in Armenia. The country’s Central Bank has already received $56 million in IMF funds since the program’s launch in May 2001.
“Armenia has overall delivered on its commitments up to now, and on this basis we are going to disburse the next tranche of IMF money in the amount of 14 million U.S. dollars,” he said.
The IMF board is scheduled to meet on November 24.