IMF to discuss release of $25 mln to Armenia under stand-by program in June

YEREVAN. April 14 (Interfax) - The International Monetary Fund (IMF) and the Armenian authorities have reached a staff level agreement for the completion of the first review of Armenia's economic reform program supported a three-year Stand-by Arrangement, the IMF said in a press release.

The IMF's executive board is scheduled to consider the review in mid-June, and after its approval Armenia might receive a $24.8 million (SDR18.4 million) tranche of the stand-by loan.

Armenia's GDP grew by 12.6% in 2022 and "economic activity has maintained strong momentum in early 2023," the IMF said.

"Relocations of about 2,600 companies, 6000 individual entrepreneurs, and 113 thousand non-residents to Armenia since March 2022 have contributed substantially to this remarkable GDP growth. Annual CPI inflation declined to 5.4 percent in March 2023 (y-o-y) from a peak of 10.3 percent in June 2022," the IMF said.

"The headline fiscal deficit narrowed to 2.1 percent of GDP, and central government debt declined to 46.7 percent of GDP in 2022. The external position strengthened, largely owing to booming services trade. The CBA's international reserves increased by $870 million in 2022 and the dram appreciated by about 25 percent against the US dollar. The banking system has remained well capitalized and highly liquid and has delivered significant profits," the Fund said.

The IMF expects growth to moderate but remain strong at about 5.5% in 2023. Inflation is expected to ease further by the end of 2023 due to monetary policy tightening and dram appreciation, as well as lower imported food and energy prices.

"However, risks to the outlook remain exceptionally high amid a challenging external environment. Potential slowdown in the global economy, tighter financial conditions, and lower trade and capital inflows could weigh on growth. On the upside, continued capital and migrant inflows may keep demand and inflationary pressures high," the IMF said.

The IMF approved the SDR128.8 million ($177.4 million) Stand-by Arrangement for Armenia in December 2022, and the first tranche of $24.4 million was released at that time.