The International Monetary Fund announced on Tuesday almost $283 million in additional emergency assistance to Armenia, citing the sharper-than-anticipated impact of the global recession on its economy.
The sum represents a 52 percent increase of an anti-crisis loan package approved by the IMF in early March after the Armenian authorities agreed to devaluate the national currency, the dram. About half of the $540 million “stand-by arrangement,” repayable in 28 months, was quickly disbursed at the time.
The IMF said that the authorities will “immediately” receive $158 million of the extra funding approved by its Executive Board at a meeting in Washington late on Monday. “Since the approval of the stand-by arrangement in March 2009, the external economic outlook has deteriorated significantly for Armenia,” the fund’s deputy managing director, Murilo Portugal, explained in a statement.
“The additional financial assistance from the Fund will help cover Armenia’s growing financing needs, while the recalibration of the authorities’ economic program will help them better respond to the deepening downturn,” said Portugal. He added that the revised government program envisages an easing of the authorities’ fiscal and monetary policies aimed at stimulating the Armenian economy.
According to the IMF statement, Armenian government will now be in a better position to maintain its expenditures “at a level close to the original 2009 budget.” A major shortfall in tax revenues forced the government in March to delay almost 14 percent of projected spending until the fourth quarter of this year. The move was seen as a prelude to a major downward revision of its budgetary targets.
The Armenian economy contracted by 15.7 percent in the first five months of this year amid an accelerating decline in the once booming construction sector. The IMF forecast a full-year GDP drop of only 5 percent for Armenia as recently as last month.
Portugal reaffirmed the IMF projection that the economic situation in the country will stabilize next year, but was cautious about its near-term growth prospects. “As external conditions improve in 2010, growth is expected to resume gradually,” he said. “The short-term outlook remains, however, very challenging.”