3 Nov 2009 19:19

IMF okays third tranche of $60 Mln stand-by loan for Armenia

YEREVAN. Nov 3 (Interfax) - The board of directors of the International Monetary Fund has approved a third tranche of a stand-by arrangement for Armenia worth 37.72 million SDRs (about $69 million), the IMF's Yerevan bureau said in a press release.

The tranche was made available following a second review of the implementation of the program. Taking the approved tranche into account, the overall worth of IMF loans, provided to Armenia, will reach 310.94 million SDRs, or about $479 million.

The IMF on March 6 2008 upheld a 28-month $540 million stand-by program for Armenia. And it increased the sum to $822.7 million on June 22. The IMF loan is intended for five years with a three-year grace period, at a 1.56% annual interest on the first 270 million, 2.56% interest on the following $135 million and 3.56% on the remaining part of the loan.

"The global crisis has continued to have a serious impact on the Armenian economy," the IMF bureau in Yerevan said, citing Takatoshi Kato, the IMF's Deputy Managing Director and Acting Chair.

"While output appears to be stabilizing, the fall in remittances and the collapse in the construction sector have caused a more severe economic contraction and lower fiscal revenue than anticipated in the first review. In light of continuing weak domestic demand, the authorities will maintain fiscal easing this year, with external resources taking up the revenue slack. As external conditions improve, growth is expected to resume gradually in 2010," Kato said.

The IMF recommended that Armenia continue reforms, especially in the tax and finance sectors.