The International Monetary Fund has given a positive assessment of the economic situation in Armenia while urging its government to speed up reforms which it believes are necessary for “more balanced and inclusive growth.”
“Armenia’s economic performance is strong with healthy growth, low inflation, a stable financial system, and improving external and fiscal buffers,” the IMF’s deputy managing director, Mitsuhiro Furusawa, said in a statement.
“Public debt remains on a declining trajectory, with Armenia expected to achieve its medium-term debt objective several years earlier than expected,” he said. “This favorable outlook provides an opportunity to accelerate reform efforts in support of more balanced and inclusive growth, declining poverty, and falling unemployment.”
“Implementation of the authorities’ reform agenda will bolster sustainable and inclusive growth,” added Furusawa.
Furusawa also noted the Armenian government’s higher-than-expected tax revenues which contrast with its failure to meet capital spending targets set by the 2019 state budget. “Strengthening the implementation of capital spending, in line with a sound public investment management process, remains a priority,” he said.
The statement came after the IMF Executive Board reviewed on December 20 Armenia’s compliance with the terms of a three-year lending program launched by the fund in May. It involves a $248 million “stand-by arrangement” which the authorities in Yerevan will be able to borrow in case of “unforeseen economic shocks.”
Prime Minister Nikol Pashinian seized upon the IMF’s “high mark” to again tout his government’s economic record on Wednesday.
“Serious investors are first and foremost guided by such evaluations,” Pashinian wrote on Facebook. The IMF statement will therefore help to make Armenia more attractive to investors, he said.
Pashinian’s political opponents and other critics point out that there has been no significant increase in foreign and domestic investments in the Armenian economy since he came to power in May 2018. Nevertheless, economic growth in the country is on course to accelerate to 7 percent this year after slowing down in 2018.
The IMF’s resident representative in Yerevan, Yulia Ustyugova, cautioned last month that this robust growth is largely driven by private consumption, rather than rising investments or exports. “So the challenge remains how to generate sustainable, long-term growth that is driven by investment and exports, rather than consumption,” she told RFE/RL’s Armenian service.
Ustyugova suggested that despite government efforts to improve the domestic business environment investors have been in no rush to open new businesses or expand existing ones because of the “transition period” in Armenia.