By Atom Markarian
The International Monetary Fund has disbursed another $15 million installment of a key loan to Armenia, citing its government’s “satisfactory” economic policies, the IMF office in Yerevan announced on Tuesday. The release of the sixth tranche of the $100 million Poverty Reduction and Growth Facility (PRGF), expected since February, was approved by the fund’s executive board in Washington on Monday. The board also extended by seven months the duration of the three-year lending scheme launched in May 2001. Armenia has already received about $73 million under the PRGF.
“The Armenian authorities should be commended for the satisfactory implementation of macroeconomic policies and structural measures under the PRGF-supported program,” the IMF’s deputy managing director, Agustín Carstens, said in a statement. “These policies have contributed to an improved business environment and a strong economic performance in 2003.”
Carstens at the same time stressed the need for improved tax and customs administration, which has topped the list of IMF demands to Armenia in recent years. “The recent reduction in [value-added tax] exemptions and reform of the profit tax are welcomed steps in this regard, but further efforts are needed to improve the tax system and generate resources for poverty reduction,” he said.
The IMF executive also urged the authorities to “maintain a tight monetary policy” for keeping inflation with a 3 percent limit this year and to “forcefully” implement their anti-corruption strategy unveiled last year.
The PRGF is a long-term low-interest loan designed for impoverished countries implementing IMF-approved reforms. It has helped to maintain macroeconomic stability in Armenia by somewhat mitigating its extremely unfavorable balance of payments.
Another, more important source of closing the import-export gap has been regular cash remittances from Armenians living and working abroad. According to the Armenian Central Bank, they totaled $140 million in the first three months of this year, or 30 percent more than during the same period last year. The money transfers surpassed $500 million in 2003.
The Central Bank chairman, Tigran Sarkisian, said a further increase in their amount has been a major reason for the recent strengthening of Armenia’s national currency, the dram, against the U.S. dollar. Sarkisian also pointed to a 30 percent surge in first-quarter Armenian exports reported by the government this year.