The International Monetary Fund reported on Tuesday “significant progress” in its negotiations with the Armenian authorities on the release of fresh multimillion-dollar IMF loans meant to bolster macroeconomic stability in Armenia.
A high-level IMF mission held further talks on the issue with Prime Minister Tigran Sarkisian, Central Bank Chariman Artur Javadian and other senior Armenian officials during a December 9-18 visit to Yerevan. They discussed terms for a 3-year lending program called the Extended Fund Facility (EFF).
“The Fund mission and the authorities made significant progress in discussions on policies and actions for 2014–17 that would be supported by a possible new EFF arrangement. Further discussions are expected during the next few weeks,” the mission chief, Mark Horton, said in a statement. He did not specify the volume of IMF funding currently under discussion.
The IMF disbursed last July the final installment of its most recent loan package for Armenia worth around $410 million. It was launched in 2010 to help the country recover from a severe recession suffered in 2009. The IMF funds have been used for financing the Armenian government’s budget deficits and shoring up national hard currency reserves.
“Armenia has made significant progress in recovering from the global crisis and reorienting its economy, but important challenges remain,” Horton said. “These include responding to the slowdown of growth in 2013, low private and foreign direct investment in recent years, and relatively high poverty and unemployment.”
Horton explained that the fresh loans planed by the IMF will be conditional on “further business environment improvements” and continued fiscal austerity in Armenia. “Better risk analysis, improved compliance, a more level playing field, and closing of tax gaps would support stronger revenues for social and investment needs and deficit reduction,” he said.
The IMF forecast in September that economic growth in Armenia will come in at around 4 percent in 2013, well below a 7 percent target that was set by President Serzh Sarkisian early this year. Sarkisian’s government made similar growth projections recently.