The Armenian authorities have assured the International Monetary Fund (IMF) that they are committed to implementing “deeper and more comprehensive” reforms sought by the Washington-based lending institution, a senior IMF official said on Tuesday.
Guillermo Tolosa, the outgoing head of the IMF office in Yerevan, also declared that Armenia has fully recovered from a severe 2009 recession and will no longer be regarded as a low-income country by the fund.
“Armenia has grown enough now,” Tolosa told RFE/RL’s Armenian service (Azatutyun.am) in an interview. “It is about to surpass the level of income that it had before the crisis. So the recovery phase is fully over.”
In his words, this means that the IMF will likely lend fresh loans to Armenia on less favorable terms. “It was deemed that [Armenia] shouldn’t have access to concessional resources, which in practice means that it shouldn’t be treated anymore as a low-income country,” he said.
The IMF is close to completing a $410 million lending program for Armenia that was launched in June 2010. The low-interest funds disbursed in several installments have been used for financing the Armenian government’s budget deficits and shoring up the national currency, the dram.
A high-level IMF mission that visited Yerevan in late April discussed with President Serzh Sarkisian and other top officials the possibility of more such loans.
Tolosa implied that continued IMF lending is conditional on a more radical reform of Armenia’s flawed business environment. “What we hear from the government is that there is the willingness to engage with us in this new [lending] program that is going to provide the context for these deeper and more comprehensive reforms,” he said.
In a joint article circulated on May 14, Tolosa and the IMF mission head, Mark Horton, warned that the Armenian government must end the privileged treatment of some businesspeople and improve tax collection if it is to speed up Armenia’s economic development. “We think the gradualist approach has run its course. Unless changes are deep and swift, the positive results that Armenians desire will also be gradual in coming, if they come at all,” they wrote.
Tolosa on Tuesday sought to downplay that unusually blunt message, saying that the IMF believes the authorities in Yerevan have made progress in recent years. “We assess positively the actions that have been taken in the past,” he said. “We think that the program that we have had in the last three years has been successful in the objectives it had.”
“The presence of well-connected businessmen in some cases could have put the brakes on reform, but we are confident that it is going to be overcome in the future,” declared the IMF official.
Tolosa went on to insist that the Sarkisian government has managed to reduce widespread tax evasion with a range of measures. “I strongly disagree with the opinion that there hasn’t been progress in this area in the last four years,” he said.
“We do know that as a whole the large taxpayers have been increasing the amount of taxes they pay over the last three or four years quite significantly. That’s a fact,” he added.