A staff-level agreement on a 3-year precautionary Stand-By Arrangement was achieved between the Armenian government and the IMF (SBA), a press release from IMF states.
The IMF Executive Board must approve the deal before it can be implemented, and this decision is anticipated in December 2022.
In order to promote investment-driven, knowledge-based, and export-led growth while maintaining macroeconomic, fiscal, and financial stability and eradicating poverty, the suggested structure will complement the government’s economic program.
A staff delegation from the International Monetary Fund, led by Ms. Iva Petrova, visited Yerevan from September 26 to October 6 at the request of the Armenian government to discuss a three-year economic plan backed by an IMF precautionary Stand-By Arrangement.
Armenia is on track to see growth of about 11% in 2022 under the guidance of sound macroeconomic policies in the face of severe global and regional challenges, according to Iva Petrova. This growth will be aided by significant inflows of foreign capital, labor, and income.
Additionally, she stated that over the medium term, economic growth is anticipated to stay in the region of 4-5 percent, with a deceleration in 2023 due to weaker external demand and tighter global financial conditions.
The government’s goals for collecting revenue will be supported by the authorities’ efforts to implement a more transparent, equitable, efficient, and environmentally friendly tax system and a better revenue administration, she added. This will also free up funds for much-needed development investment.
Ms. Petrova also discussed monetary policy, stating that the current course is suitable and that any future modifications should be contingent on how inflation and inflation expectations develop. The effectiveness of the transmission mechanism for monetary policy will continue to be improved by initiatives to promote the growth of capital markets and broaden financial inclusion.
She found that the government’s program for structural transformation rightly places a strong emphasis on enhancing the business climate, encouraging productivity, lowering unemployment and poverty, and tackling critical issues related to climate mitigation and adaptation.
Read the full press release here.
