IMF allocates Armenia $171 mln for economic and financial stability

YEREVAN. Dec 13 (Interfax) - The International Monetary Fund has approved the allocation of more than $171.1 million to Armenia for the government's economic program.

The IMF said in a press release that its Executive Board had approved an SDR 128.8 million or about $171.1 million 36-Month Stand-By Arrangement for Armenia to help maintain macroeconomic stability, provide insurance against downside risks, and support structural reform agenda.

The Armenian authorities have indicated that they will treat the arrangement as precautionary, the IMF said. The new SBA will serve as insurance in case shocks generate balance of payments needs, it said.

"The arrangement is based on the authorities' homegrown economic program that aims to achieve investment-driven, knowledge-based, and export-led growth, while preserving macroeconomic, fiscal, and financial stability and reducing poverty," it said.

An amount equivalent to SDR 18.4 million or about $24.4 million becomes immediately available to Armenia. The remaining amount will be made available, subject to six semi-annual reviews.

A staff team from the International Monetary Fund visited Yerevan from September 26 to October 6 at the request of the Armenian authorities, to discuss a three-year economic program supported by an IMF precautionary SBA.

Armenia is on course to achieve growth of about 11% in 2022, in part driven by large inflows of external income, capital, and labor into the country, the IMF has said. Fiscal over-performance and dram appreciation have contributed to a significant decline in public debt, which is expected to drop to 51% of GDP this year from 60.3% of GDP in 2021. Economic growth is expected to decelerate in 2023, reflecting weaker external demand and tighter global financial conditions, and to remain in the 4-5% range over the medium term, the IMF said.

The IMF earlier forecast Armenia's GDP might grow 7% in 2022 and 3.5% in 2023.

The 2022 state budget assumes 7% GDP growth. The Finance Ministry forecasts the economy will grow 7% in 2023 and the Central Bank thinks 4-5% growth possible.