IMF Board completed the 4th review under the SBA with Armenia,  providing the country with access to SDR $24.12 million

ArmInfo. The IMF Executive Board completed the forth review under the Stand-By Arrangement (SBA)  with Armenia, providing the country with access to SDR 18.4 million (about US $24.12 million).

This was noted in the IMF statement, which  stated that the completions of the review will bring total access to  SDR 92 million (about US $120.59 million). The IMF forecasts that  supported by strong domestic demand, real GDP growth in Armenia is  projected to reach about 6 percent in 2024 (versus 8.3% in 2023 -  ed.) and moderate to about 5 percent in 2025.  Over the medium term  growth, according to IMF forecasts, Armenia's GDP growth will  decelerate to around 4.5%, although an acceleration of structural  reforms could raise growth potential. Inflation is projected to  remain below the CBA target in the short term and rise gradually  toward its target over the medium term.

"The program is broadly on track. All quantitative performance  criteria and indicative targets for end-June 2024 were met, although  lower-than-expected inflation breached the lower-inner Monetary  Policy Consultation Clause band (4%, +/- 1.5 - ed.). The authorities  have adopted a 2025 budget with an overall fiscal deficit of 5.5% of  GDP, in line with the program, to accomodate urgent spending needs  and intend to resume fiscal consolidation in 2026," the IMF said in a  statement.

Following the executive Boards' discussion today, Mr. Bo Li, Deputy  Managing Director and Acting Chair made this statement:  "Armenia's  economic outlook is positive, with robust growth and low inflation.   The program performance is strong, but sustained prudent policies and  reform efforts remain critical to preserve buffers and build  resilience in a still uncertain domestic and external environment.   The 2025 budget appropriately balances preserving macroeconomic  stability and addressing priority spending related to the integration  of refugees and high security spending needs. Over the medium term,  gradual fiscal consolidation will be critical to maintain financial  stability. Planned measures include strengthening revenue  mobilization, expenditure prioritization, and adoption of a  medium-term expenditure framework.  Progress on public financial  management reforms is essential to reduce fiscal risks, especially  those related to state-owned enterprises, public-private  partnerships, and government guarantees." 

According to IMF, external reserves and financial sector buffers  remain high. According to Mr. Bo Li, the monetary policy stance is  appropriate, and further policy rate decisions should continue to be  guided by the outlook for inflation and inflation expectations given  the uncertain outlook. " The CBA's growing credibility since the  adoption of inflation targeting in 2006,  strengthened operational  independence, and upgrades to its monetary policy framework provides  scope for lowering the inflation target within a well- coordinated  and communicated strategy. The flexible exchange rate has served  Armenia well to in absorbing external shocks, while building reserve  buffers." 

According to Mr. Bo Li, the banking system of Armenia remains sound.   The authorities continues to carefully monitor financial sector  risks, particularly originating from the real estate market, and  recalibrate prudential tools if necessary. He believes that efforts  should  focus on preserving capital buffers, enhancing supervisory  powers and capacities, and strengthening anti-crisis management,  including through adoption of the new bank resolution law..   "Advancing structural reforms would support sustainable and inclusive  growth. Continued efforts to boost labor market participation,  especially among youth, women and vulnerable groups. Reforms to  diversify exports, improve the business environment, strengthen  governance and advance climate policy are critical to enhance  economic resilience and increase potential growth," Mr.  Bo Li  concluded.