ArmInfo.Armenia's gross international reserves (GIR) are decreasing from the historical high - from $4.112 billion in December 2022 to $3.545 billion in February 2023. In particular, in January-February gross international reserves decreased by 13.8% or by $567 million, which was observed at a more restrained pace a year earlier - a decline by 6.7% or by $217.2 million.
At the same time, the y-o-y dynamics (February 2023 to February 2022 ) improved with an increase of 17.7% (from a 5.4% decline a year earlier), i.e. in absolute terms, last year's decline by $172 million has been replaced by the current growth of $532.1 million. This is evidenced by the data of the Central Bank of the Republic of Armenia. In particular, the two-month decline in GIR was due to a decrease in external assets in hard currency by 14.3% - to $3.520 billion, with a 3.7-fold increase in the share of SDR in the IMF - to $22.6 million, while a year earlier in January-February 2022 the decline in external assets in hard currency by 6.7% was accompanied by a decline in the share of SDRs in the IMF by 5.4%.
On a y-o-y term (February 2023 to February 2022), the growth of GIR was provoked by an increase in external assets in hard currency by 18.1%, with a decline in the share of SDR in the IMF by 27.1%, while a year earlier (February 2022 to February 2021), the decline in external assets in hard currency by 6.2% was accompanied by a 7-fold increase in the share of SDR in the IMF. In February 2023 alone, the decline in GIR slowed down from 10.3% to 4%, which in absolute terms means a reduction of $144.3 million (against $422.6 million in January). This was due to a similar slowdown in the decline in foreign assets in hard currency from 10.9% to 3.8%, with a reversal in the dynamics of the share of SDR in the IMF from a 5-fold increase to a 26.1% decline. A year earlier, in February 2022, the GIR and its components (foreign assets in hard currency and the share of SDR in the IMF) also showed a downward trend, but with a monthly acceleration.
It should be noted that by 2023, Armenia's gross international reserves (GIR) reached a historical maximum - $4.112 billion, with a y-o-y growth of 27.3% or $881.8 million (against 23.5% growth in 2021). External assets in hard currency also reached a historical maximum - $4.108 billion, having increased by 28.5% over 2022, with a decline in the share of SDR in the IMF by 81.3% - to $6.2 million, while a year ago, both increased by 22.7% and 3.7-fold, respectively. It is worth noting that the share of SDRs in the IMF for 2022 has decreased even more from the record level of August 2021 of $178.2 million.
As a comparison, let's take a look at the pre-Covid dynamics of 2019: the growth of external assets in hard currency by 26.2% and the share of SDRs in the IMF by 3.2 % ensured the growth of GIR by 26.1%. The share of banking gold in Armenia's GIR was set to zero back in December 2003.
In early May 2022, the Executive Board of the International Monetary Fund (IMF) decided to provide Armenia with 25.716 million SDRs (about $35 million) under the Stand-By Agreement (SBA), as a result of which the total amount of payments under the program will be 308.8 million SDRs (about $415 million).
The IMF statement indicated that the decision was taken by the Fund's Executive Board without convening formal discussions, completing the review of the sixth and final SBA reviews, thereby allowing the authorities to raise the abovementioned amount. The same report noted that the performance of the three- year standby agreement (SBA) remained strong despite a number of internal and external shocks. Much later, on December 13, 2022, the IMF approved a three-year standby loan program for Armenia in the amount of about $171.1 million (128.8 million SDR), which is about 100% of the RA quota in the IMF. From the moment the program is approved in December, $24.4 million (18.4 million SDRs) becomes immediately available to Armenia, and the rest of the amount will be provided after final reviews of six semi-annual periods. This reserve program, according to the assurances of the Armenian authorities, is considered preventive and will help hedge the balance of payments against shock consequences, as well as serve as an incentive for the efforts of the authorities in terms of reforms.
