IMF forecasts 3.8% GDP growth in Armenia

PanARMENIAN.Net - An International Monetary Fund (IMF) mission led by Mr. Mark Horton visited Yerevan during March 14 –27 to conduct discussions for the Fourth Review of the Extended Fund Facility (EFF)/Extended Credit Facility (ECF) arrangements. At the conclusion of the visit, Mr. Horton issued the following statement:

“Despite a less supportive external environment, overall macroeconomic conditions have continued to improve. The economy is expected to have grown by 4.4 percent in 2011, driven by strong growth in the industry and services sectors. Inflation has significantly moderated to below 4 percent in February (year-over-year), supported by a sound monetary framework. External imbalances have moderated, through continuing fiscal adjustment as well as strong export and remittances growth, but the external current account deficit remains relatively large and further adjustment is needed to reduce vulnerabilities.

The government and Central Bank of Armenia also met or made substantial progress on all structural benchmarks under the program. Important technical steps regarding tax administration have been achieved, potentially laying the groundwork for a more modern, effective and business-friendly tax administration. There has also been progress in laying out tax policy strategies for the next few years, in further strengthening the inflation targeting framework, in consolidating financial stability and in bolstering the effectiveness of the provision of social services.

Against the backdrop of weak external environment, the growth projection was reduced to 3.8 percent in 2012 with risks tilted to the downside. In light of expected absence of further pressures in international prices, inflation is expected to remain around the Central Bank’s target. With continued fiscal consolidation over the medium-term, the authorities’ welcome focus on export growth and other business environment improvements, strong remittances, and exchange rate flexibility, the current account deficit is expected to continue to decline,” press service of IMF resident representative office in Armenia reported.