By Emil Danielyan
The International Monetary Fund has disbursed the final $5.4 million installment of a three-year lending program for Armenia designed to support its government’s efforts to maintain macroeconomic stability and reduce poverty. The $37.3 million loan, called the Poverty Reduction and Growth Facility (PRGF), was approved in May 2005 and has since been allocated to the Armenian government in six installments.
In a statement made public late Wednesday, the deputy managing director of the IMF, Murilo Portugal, praised the government for its “prudent macroeconomic policies” and “structural reforms” advocated by the fund.
“A marked reduction in poverty has been achieved in a high-growth and low inflation macroeconomic environment,” Portugal said. “Strong remittance and foreign direct investment inflows have dampened the impact of rapidly rising imports on the balance of payments.”
“The medium-term outlook remains positive in view of favorable investment prospects,” he added.
The IMF official urged the authorities in Yerevan to stick to “sound” fiscal and monetary policies. He said a further reduction in poverty is also contingent on improving tax collection and the business environment.
Ever since its independence Armenia has borrowed from the IMF a total of about $400 million in various low-interest loans repayable over 10 years. They have been used for shoring up its hard currency reserves and financing budget deficits.
The importance of budgetary loans provided by the IMF and the World Bank has decreased in recent years parallel to the robust growth of the Armenian economy and a sizable increase in tax revenues. The government will for the first time finance most of its projected budget deficit from domestic sources this year.