IMF’s Executive board has completed its 3rd review of Armenia’s economic performance under a concessional loan arrangement. The arrangement, through a joint agreement of Extended Fund Facility (EFF) and Extended Credit Facility (ECF), gave Armenia access to 266.8 mln SDR, or approximately $413,4 mln. Current tranche will bring total disbursements to SDR 144.8 million (about US$224.3 million). The EFF/ECF agreement was approved in June 2010.

Following the Executive Board’s discussion on Armenia, Ms. Nemat Shafik, Deputy Managing Director, stated:

“The Armenian authorities should be commended for continued implementation of sound policies under the Fund-supported program, which have helped underpin the moderation of inflation this year and the continuing post-crisis recovery.”

“Fiscal policies have been prudent, with the budget deficit reduced significantly again in 2011, and further consolidation planned for 2012 and beyond. This should help ensure fiscal and debt sustainability and reduce vulnerabilities. The 2012 tax package is welcome, as it will ease the adjustment burden on spending. Further measures are expected in the forthcoming tax strategy paper.”

“Armenia faces increasing downside risks from the global environment, which may exacerbate its existing vulnerabilities. While the ongoing fiscal adjustment and higher reserves targets have helped strengthen buffers, the elevated post-crisis public debt burden now limits policy space. Timely and prudent policy responses will be needed in the period ahead, involving greater exchange rate flexibility and steadfast progress to strengthen the business environment and increase competitiveness.”

EFF/ECF replaced a short term Stand-By agreement, signed in march 2009 as an anti-crisis package, with total amount of $540 mln (as SDR equivalent) and SDR-linked interest rate. EFF’s interest rate too is linked to SDR rate, while ECF has a zero rate. Disbursements are scheduled until June 2013.