ArmInfo. On February 10, the Government of Armenia approved the draft law "On the ratification of the letter of agreement "On the use of the funds of the Reserve Program", signed between the Republic of Armenia and the International Monetary Fund on January 11 and 18, 2022."
According to the source, back in May 2019, the International Monetary Fund (IMF) approved a three-year Stand-by Arrangement program for the Republic of Armenia worth 180 million SDRs (248.2 million US dollars), aimed at implementing fundamental economic and structural reforms.
As part of the second revision of the program, an agreement was reached with the IMF to change the purpose of the program, to use the funds available under the reserve program to finance measures to mitigate the socio-economic consequences of the coronavirus pandemic. The same agreement was reached to raise an additional SDR 128.8 million ($175 million) under the IMF's Rapid Financing Instrument. As a result, on May 23 and June 1, 2020, a letter of agreement was signed between the Republic of Armenia and the IMF "On the use of the funds of the reserve program and the attraction of additional borrowed funds", within the framework of which, in general, budgetary funds in the amount of about 231.656 million SDRs (315 million US dollars) were allocated.
In October-November 2021, the fourth and fifth joint reviews of the Reserve Program took place, as a result of which SDR 51,428 million of budgetary funds were allocated. Due to the need to finance the state budget deficit, on November 19, 2021, the Government of the Republic of Armenia turned to the IMF with a "Letter of Intent" in order to attract available funds as budget assistance.
To allocate the abovementioned funds, on January 11 and January 18, 2022, the IMF and the Republic of Armenia signed a letter of agreement "On the use of funds from the reserve program", as was implemented in 2020. It is noted that this letter of agreement creates additional financial obligations for the state budget of the Republic of Armenia.
"Taking into account that the issuance of loans to be received under the letter of agreement between the Republic of Armenia and the International Monetary Fund "On the use of the funds of the reserve program" is provided for during Q1 2022, the loan will be used to finance the state budget deficit for 2022 in accordance with the RA Law "On the State Budget of the Republic of Armenia for 2022," the rationale for the project notes.
It should be noted that on May 17, 2019, the IMF approved the provision of a stand-by credit line to Armenia for a 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 the IMF. Of this amount, SDR 25.714 million (equivalent to almost $35.5 million) was scheduled to be received immediately, while the rest was provided based on six semi-annual assessments. A year later, in mid-May 2020, the IMF increased financial support for Armenia by 128.8 million SDRs (about $175 million), which, together with the intention of the authorities to attract the resources accumulated under the SBA, made it possible to receive 206 million SDRs (about $280 million), payable immediately. It was reported that these loans are aimed at strengthening the economic foundations and policies of Armenia, as well as carrying out structural reforms, in particular to improve management efficiency and improve the business environment.
