ArmInfo. The Board of Directors of the International Monetary Fund (IMF) decided yesterday to allocate Armenia $ 280 million to fight the coronavirus pandemic, Prime Economic Information Agency reports citing the fund's press service.
"The decision of the IMF Executive Council provides for the immediate allocation of 280 million US dollars to Armenia," the Fund said.
The Fund adds that "access to this funding will help authorities prevent short-term risks and provide resources to address the urgent social and economic consequences of the COVID-19 pandemic."
Earlier, ArmInfo reported, that IMF team has reached a staff level agreement with the Armenian authorities for the completion of the second review of Armenia's reform program, which is supported by the IMF. The authorities have requested an increase in financial support provided by the IMF for Armenia and, pending Executive Board approval, around $280 million will be available immediately after the Board meeting.
The IMF believes that the COVID-19 pandemic, along with the recent oil price shock and tightening global financial conditions, will significantly change Armenia's short-term economic prospects and provoke a deterioration in its external and fiscal accounts. "Wider access to IMF financing will help the Armenian authorities to contain short-term risks and provide resources to meet urgent medical and socio-economic needs during the peak of the outbreak," the IMF said in a statement. It is recommended to increase financial support to Armenia from the IMF by 128.8 million SDR (about $ 175 million), which, together with the authorities' intention to attract resources accumulated under the SBA, will allow receiving 206 million SDR (about $ 280 million), payable immediately after Board of Directors meeting.
It should be noted that the IMF presented an updated forecast for Armenia for 2020, expecting GDP growth at the level of -1.5%, for the state debt - over 60% of GDP, for the state budget deficit - an increase of up to 5% of GDP. The IMF made such a forecast for the Armenian economy, given the restrictions on internal mobility and activity associated with COVID, significantly lower external demand, more stringent financial conditions and disruptions in global trade and supply chains. And the forecasted 2020 increase in the ratio of the state budget deficit to GDP is caused by a decrease in income and an increase in spending on health care and economic support.
To recall, a year earlier, on May 17, 2019, the International Monetary Fund (IMF) approved providing Armenia with a stand-by credit line for the three-year "transit period" in the amount of SDR 180 million (equivalent to almost $ 248.2 million) or about 139.75% of Armenia's quota in IMF. Out of this amount, it was planned to immediately receive 25.714 million SDR (equivalent to almost $ 35.5 million), and the provision of the rest was provided on the basis of six semi-annual estimates.
These loan funds are aimed at strengthening the economic foundations and policies of Armenia, as well as conducting structural reforms, in particular, improving management efficiency and improving the business environment. This loan was provided to neutralize macro-risks, namely, internal "transit" risks and possible external shocks caused by the possible increase in sanctions against Armenia's main trading partner, Russia, creating uncertainty, both in terms of a possible "subsidence" of production and export volumes, as well as the plan of risks of reducing the transfer component of the economy. The ability of these factors to influence the level of aggregate demand and create certain imbalances in the country's balance of payments was taken into account.
