2013年-IMF国际货币组织全球_Republic_of_Armenia_Sixth_Reviews_Under_the_Extended_Fund_Facility_Arrangement_and_the_Extended_Credit_Facility_Arrangement_63页_1mb

Summary of the Sixth Reviews Under the Extended Fund Facility and Extended Credit Facility Arrangements for the Republic of Armenia

Core Content

The sixth reviews under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements for the Republic of Armenia were conducted in April–May 2013, with the final staff report completed on June 7, 2013. These reviews marked the conclusion of the Fund-supported program, which aimed to restore fiscal and external sustainability, preserve financial stability, and reduce poverty. The program remained on track, with most performance criteria (PCs) and structural benchmarks (SBs) met, although some challenges and risks were identified.

Key Economic Developments

• Growth: Growth accelerated to 7.2% in 2012, driven by agriculture, mining, and services. It remained strong in early 2013, though the staff projected a moderation in 2013 and a trend growth of 5.1% for the year, with medium-term growth raised to 5.5% if strong reforms continue.
• Fiscal Deficit: The 2012 fiscal deficit was 1.6% of GDP, below the projected 2.1%, due to strong revenue performance and delays in major capital projects. The 2013 budget foresaw a deficit of 2.6% of GDP, though new delays in the North-South Highway project were noted.
• Inflation: Inflation remained subdued, at 3.2% in 2012, and was projected to rise to 3.9% in April 2013. A potential gas price increase could push inflation further.
• Monetary Policy: The Central Bank of Armenia (CBA) maintained a neutral monetary policy stance, with the policy rate at 8% since 2011. Efforts to reduce dollarization continued, including lowering reserve requirements on dram deposits and implementing new FX liquidity ratios.

Main Challenges and Risks

• External Risks: The current account deficit remained high at 10.5% of GDP, above the medium-term sustainable level of 6-7%. Risks include a potential gas price increase, a slowdown in Russia and the EU, and geopolitical tensions.
• Fiscal Risks: The deficit is expected to be lower than budgeted in 2013, but pension reform and other spending needs may require further fiscal consolidation.
• Financial Sector: Dollarization remains high at 70% of assets and liabilities, and financial sector indicators have weakened despite continued credit growth. The CBA is working to strengthen the financial sector through FSAP and TA recommendations.
• Business Climate: Business climate reforms are ongoing, but private investment remains weak. Structural reforms are needed to improve competitiveness and attract foreign investment.

Key Policy Recommendations

• Monetary Policy: Continue to implement inflation targeting, monitor inflation and gas price developments, and consider a tighter stance if needed to prevent second-round effects.
• Fiscal Policy: Further reduce the fiscal deficit, increase tax revenues, and ensure that spending on social programs and infrastructure remains within the fiscal envelope.
• Structural Reforms: Deepen the financial sector, enhance the legal framework for competition, and improve public sector governance. The conclusion of the EU Free Trade Agreement (FTA) is critical for integration and competitiveness.
• Exchange Rate and Reserves: Maintain a flexible exchange rate and ensure that FX interventions are limited to smoothing volatility while preserving reserve buffers.
• Successor Program: Discussions were initiated on a successor program to build on post-crisis stabilization and support structural reforms necessary for emerging market status. The program should focus on further fiscal and external adjustment, and a more "open for business" environment.

Key Information

• Program Status: The program is on track, with all PCs and most ITs and SBs met. The authorities requested the release of SDR 55.0 million with the completion of the reviews.
• Elections: The two-year electoral cycle concluded in 2013, allowing for more policy action.
• Pension Reform: A sound legal framework was established, and the authorities are consulting with global asset managers to manage pension funds.
• Private Sector Integration: Efforts to integrate social benefit payments and improve tax administration are progressing, though challenges in implementation and compliance remain.

Conclusion

The sixth reviews confirmed that the Fund-supported program has been effective in restoring fiscal and external sustainability and financial stability. However, continued efforts are needed to address remaining challenges, including the high current account deficit, weak private investment, and the need for structural reforms to improve the business environment and competitiveness. A successor program is expected to support further adjustment and reforms to secure Armenia's position as an emerging market.