By Ruzanna Stepanian
A senior official from the International Monetary Fund made on Thursday an unusually positive assessment of the economic situation in Armenia, endorsing government statistics that show continuing high rates of GDP growth and a sizable reduction in poverty. “Armenia is on a promising path toward sustained high growth and the alleviation of poverty,” Agustin Carstens, the IMF’s deputy managing director, declared at the end of a two-day visit to Yerevan.
“I am encouraged by the meetings held yesterday and today,” Carstens said of his talks with Central Bank Chairman Tigran Sarkisian, Finance Minister Vartan Khachatrian, Foreign Minister Vartan Oskanian and other senior Armenians. “I sensed strong ownership of reforms, which is good for continued economic success.”
“The IMF stands ready to continue to assist Armenia with policy and technical advice, as well as financial support in implementing its reform agenda,” he added.
The Washington-based fund has supported the macroeconomic policies of the Armenian authorities for much of the past decades, regularly rewarding them with loans. Its most recent lending program, worth $34 million and spread over three years, was launched on May 26.
IMF officials believe that those policies have been responsible for Armenia’s robust economic growth that averaged 11 percent in the last four years. The Armenian economy expanded by another 8 percent during the first half of this year.
Critics, however, point to a highly uneven distribution of the benefits of that growth which is evidenced by the continuing avoidance of taxes by the country’s wealthiest citizens connected to the government. But the authorities claim that the proportion of Armenians living the below the official poverty line fell from 50 to 33 percent between 1999 and 2003. Government officials say the poverty rate is likely to have dropped further since then.
“There are very few countries that have achieved such an important progress in such a short period of time,” Carstens told a news conference in Yerevan, describing the official poverty figures as “trustworthy.”
Carstens said the Armenian economy is now growing so fast due to a rise in cash remittances from Armenians working abroad that it runs the risk of “overheating” that would push up inflation. He praised in this regard the Central Bank’s monetary and exchange rate policies.
Those policies have led to a sharp appreciation of the national currency, the dram, against the U.S. dollar and the European Union euro over the past 18 month. The dram’s strengthening has hit hard a large part of the country’s population dependent on external financial support. The Central Bank, backed by the IMF and the World Bank, has repeatedly denied allegations that the authorities themselves engineered the exchange rate change to siphon off part of the multimillion-dollar remittances and benefit large-scale importers.
The IMF official also praised the Armenian authorities for achieving a nearly 30 percent increase in their modest tax revenues this year. “I very much welcome the tax and customs reforms already implemented, which have resulted in a notable increase in revenue collection,” he said.
(Photolur photo: Agustin Carstens.)