The International Monetary Fund has praised the Armenian government’s efforts to improve the domestic business environment, reform tax administration and attract more foreign investment, saying that is essential for speeding up economic growth.
In a statement released late on Thursday, the IMF reported details of a June 23 meeting of its Executive Board that discussed the macroeconomic situation in Armenia and reforms announced by Prime Minister Karen Karapetian’s cabinet.
“[IMF] directors called for continued efforts to advance structural reforms to foster sustainable and inclusive growth,” read the statement. “They underscored the need to promote private sector development and diversify the economy by attracting [foreign direct investment.] In this context, they welcomed the authorities’ growth-promoting initiatives to improve the business environment, encourage competition, and strengthen governance.”
The IMF board also praised government efforts to combat tax evasion and improve tax administration, saying that they have already translated into a sizable rise in tax revenue.
Its overall assessment of government policies is in tune with statements made by an IMF team that visited Yerevan on a two-week mission in April. The mission chief, Hossein Samiei, told reporters that Karapetian’s cabinet is “reform-minded and committed to improving the structural environment.”
Karapetian has repeatedly pledged to create “equal conditions” for all business since he was named prime minister in September. Opposition politicians dismiss the premier’s ambitious reform agenda, however. They say, in particular, that wealthy businesspeople close to the government continue to enjoy a monopoly on lucrative imports of essential goods and commodities.
The IMF board stood by higher economic growth rates that were forecast for Armenia by the Washington-based Fund earlier. “With improving outlook in major trading partners and a pickup in private sector activity, real GDP is projected to grow by around 3 percent in 2017, while inflation would reach around 2 percent by end-2017,” it said. “Medium-term growth is projected at 3.5-4 percent.”
“Nevertheless, there are risks: the recent recovery in remittances and copper prices may not endure, and growth in key trading partners could be weaker than expected,” it warned.
The government expects that the Armenian economy will expand by at least 3.2 percent this year. In its policy program approved by parliament last month, it committed itself to ensuring that annual growth accelerates to around 5 percent in the following years.
Economic activity in Armenia was largely stagnant last year amid a continuing recession in Russia, the country’s leading trading partner and the main source of multimillion-dollar remittances from Armenian migrant workers.