IMF Executive Board Completes First Review Under EFF/ECF Arrangement for Armenia and Approves US $57.6 Million Disbursement.

The Executive Board of the International Monetary Fund (IMF) has completed its first review of Armenia’s economic performance under a program supported by the Extended Fund Facility (EFF) and the Extended Credit Facility arrangement (ECF).The Board’s decision was taken on a lapse of time basis.

The decision enables the authorities to draw an additional SDR 39.0 million (US 57.6 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 78.1 million (US 115.2 million).

The three-year SDR 266.8 million (about US 393.9 million) EFF and ECF arrangement with Armenia was approved by the IMF’s Executive Board on June 28, 2010.

The IMF also released the results of its annual review of the Armenian economy. The IMF points out economic recovery – but at low rates. The IMF forecasts 4% GDP growth for this year, and 4.6% GDP growth for next year.

This July, the IMF forecasted 4.8% GDP growth and a 6.2% price rise for this year.

NEWS.am reminds readers that this September, the IMF Resident Representative in Armenia Guillermo Tolosa criticized Armenia’s tax policy. He called curious the high VAT rates reflecting the Government’s debts to exporters. At his Sept. 29 press conference the IMF official pointed out that the IMF and the Armenian Government were discussing the issue to understand the reason for such high debts. He accused the Armenian Government of hindering exports instead of promoting them. Mr. Tolosa also pointed out that in its letter to the IMF the Armenian Government pledged to resolve the problem.

As regards Armenia’s economic strategy, he pointed out that Armenia-like countries with a population of 3 million are unable to develop their economies on the basis of their domestic demand. Armenia cannot develop by only selling products in the domestic market and constructing building, Tolosa said. He advised a strategy of winning other markets.