IMF国际货币组织全球-Armenia_First-Review-under-the-Stand_73页_1mb

Summary of the First Review Under the Stand-By Arrangement for the Republic of Armenia

Core Content

The International Monetary Fund (IMF) conducted the first review under the Stand-By Arrangement (SBA) for the Republic of Armenia on December 20, 2019. The SBA, approved on May 17, 2019, provides a total access of SDR 180 million (about US$248.2 million), equivalent to 139.75 percent of Armenia's quota. The review confirmed that the program is broadly on track, with the authorities committed to their reform agenda and maintaining fiscal prudence.

Main Points

Economic Performance

• Growth: Real GDP growth was strong in 2019, with 7.1 percent in the first half and projected to exceed 6.5 percent for the full year.
• Inflation: Annual CPI inflation fell to 0.5 percent in September 2019, remaining below the 1.5 percent band around the CBA's target of 4 percent.
• Fiscal Position: The 2019 fiscal outturn overperformed the budget, driven by higher-than-expected revenues and lower-than-expected capital spending.
• Public Debt: Public debt is on a declining trajectory, with the goal of achieving the medium-term debt objective several years earlier than expected.
• Current Account: The current account deficit is expected to narrow in 2019, with the trade deficit declining relative to GDP.

Key Areas of Focus

• Fiscal Prudence and Public Investment: The authorities are on track to reduce central government debt below 50 percent of GDP by 2019, well before the 2023 target. The 2020 budget is projected to target a fiscal deficit of 2.25 percent of GDP.
• Monetary Policy: The CBA's focus on price stability and inflation targeting has been effective, with the monetary policy framework being strengthened through Basel III measures.
• Financial Sector Resilience: The financial system remains stable, with non-performing loans (NPLs) low and profitability improving.
• Governance and Anti-Corruption: Efforts to improve governance and establish a holistic anti-corruption framework are ongoing. A new anti-corruption strategy for 2019–23 was approved by the government on October 3, 2019.
• Social Safety Net: The authorities reaffirmed their commitment to improving the social safety net, including better targeting and expansion of benefits.

Program Implementation

• Quantitative Performance Criteria (QPCs): All QPCs were met, including the net official international reserves, fiscal balance, and external public debt arrears.
• Structural Benchmarks (SBs): Most structural benchmarks were implemented, including the submission of the draft PPP law, the development of a tax administration strategy, and the adoption of legislation for a beneficial ownership registry.
• Social Spending: The indicative target (IT) on social spending was marginally missed, but the government committed to increasing the budgeted allocation for 2020.

Key Information

• IMF Support: Upon completion of the review, an additional SDR 25.714 million would be made available, bringing the total accessible credit to about SDR 51.428 million.
• Program Duration: The SBA is a 36-month program, set to expire on May 16, 2022.
• Exchange Rate: The dram appreciated slightly in recent months, despite the CBA's FX purchases.
• Capital Market Development: The CBA is developing a strategy to strengthen the capital market, though technical consultations are still ongoing.
• Reforms: The authorities have implemented several reforms, including property tax reforms, and are continuing efforts to improve tax administration and reduce the shadow economy.

Documents Included

• Press Release: Summarizes the Executive Board's views and the outcome of the review.
• Staff Report: Details the economic developments and policies underpinning the IMF arrangement.
• Statement by the Executive Director: Provides an official perspective on the review.
• Letter of Intent and Memorandum of Economic and Financial Policies are also included, along with the Technical Memorandum of Understanding.

Conclusion

The review concluded that Armenia's economic performance is strong, with a favorable outlook for growth and inflation control. The authorities are maintaining fiscal discipline and implementing reforms to improve governance and financial sector resilience. Continued efforts to strengthen revenue mobilization and social spending are emphasized, with the SBA serving as a precautionary measure to safeguard against potential economic shocks.