Economic News from Armenia
IMF APPROVES FINAL US$5.4MLN DISBURSEMENT TO ARMENIA
UNDER PRGF ARRANGEMENT
ARKA
May 20, 2008
YEREVAN, May 20. /ARKA/. The Executive Board of the International Monetary Fund (IMF) today completed the sixth and final review of Armenia's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables
the release of an amount equivalent to SDR 3.32 million (about US$5.4 million), bringing total disbursements to the full amount of SDR 23 million (about US$37.3 million) under the arrangement.
Following the Executive Board's discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said that Armenia's adherence to prudent macroeconomic policies and the progress made in structural reforms have contributed significantly to its strong perfor- mance under its third PRGF arrangement. A marked reduction in poverty has been achieved in a high-growth and low inflation macroeconomic environment. "Strong remittance and foreign direct
investment inflows have dampened the impact of rapidly rising imports on the balance of payments. The medium-term outlook remains positive in view of favorable investment prospects," he said.
The IMF official pointed out that continued sound fiscal and monetary policies remain key to maintaining macroeconomic stability and external competitiveness, against the background of large-scale foreign exchange inflows and upside inflationary risks. A tighter-than-budgeted fiscal
stance is warranted for 2008 as this would deliver welcome support to monetary policy in keeping inflation expectations well anchored.
The existing monetary policy framework, based on a flexible exchange rate, remains the best option for Armenia., Portugal said. "The authorities' timely monetary policy actions over the past year have demonstrated the authorities' commitment to price stability and helped contain inflationary expectations despite strong headwinds from higher world food and energy prices," he said.
Portugal stressed that strengthening the capacity for fiscal policy analysis will be important for improving the effectiveness of fiscal policy and helping maintain fiscal discipline. Increasing revenue collections in a transparent and nondiscretionary manner will also be crucial, in view of the need to improve the country's infrastructure, reduce poverty, and improve the business environment.
The authorities intend to press ahead with their structural reform agenda to remove remaining bottlenecks to broad-based growth and to safeguard competitiveness.
"Future reform efforts will appropriately focus on deepening productivity-enhancing structural reforms, notably by reducing the cost of doing business, boosting domestic competition, diversifying the economy, and discouraging participation in the shadow economy," Portugal said.
He pointed out that the IMF welcomes Armenia's interest in continuing its close cooperation with the Fund after the current PRGF arrangement expires in May 2008. Over the last 18 years, the IMF has allocated $360mln to Armenia, with 80% of the loans carrying an annual interest rate of 0.5 percent and being repayable over 10 years with a 5½ year grace period on principal payments.
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Minister Sees Continued Robust Growth
By Anna Saghabalian
The Armenian economy will continue to grow strongly this year despite recent political turmoil, Minister of Economy Nerses Yeritsian said on Wednesday.
According to official statistics, Armenia's Gross Domestic Product increased by 13.7 percent in 2007, its sixth consecutive year of double-digit expansion. The growth rate slowed to 8.9 percent in the first quarter of this year amid the country's worst political crisis in nearly a decade resulting from the disputed presidential election of February 19. But that did not prevent the Armenian government from registering a further sizable increase in its tax revenues.
Yeritsian downplayed the negative impact of the crisis on short-term growth prospects, predicting a full-year GDP growth of at least 8 percent for 2008. `Our investment projects will allow us to maintain the high growth rate in the coming years,' he said.
`The investors with whom we are talking have not changed their plans much,' Yeritsian told a news conference. `Of course, they are asking some questions and we must make additional efforts to assure them that the situation hasn't changed, that the [government's economic] policy is continuing and that we are going to implement new programs.'
Yeritsian cautioned, however, that growth will inevitably slow down in the longer term due to objective factors. `That will be natural because rich countries grow more slowly than more low-income ones,' he explained.
While admitting the uneven distribution of its benefits, the government maintains that recent years' growth has considerably boosted living standards in Armenia. Government figures show that the proportion of Armenians living below the official poverty line has fallen from over 50percent to below 30 percent between 2001 and 2006.
ARKA
May 20, 2008
YEREVAN, May 20. /ARKA/. The Executive Board of the International Monetary Fund (IMF) today completed the sixth and final review of Armenia's economic performance under the Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables
the release of an amount equivalent to SDR 3.32 million (about US$5.4 million), bringing total disbursements to the full amount of SDR 23 million (about US$37.3 million) under the arrangement.
Following the Executive Board's discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said that Armenia's adherence to prudent macroeconomic policies and the progress made in structural reforms have contributed significantly to its strong perfor- mance under its third PRGF arrangement. A marked reduction in poverty has been achieved in a high-growth and low inflation macroeconomic environment. "Strong remittance and foreign direct
investment inflows have dampened the impact of rapidly rising imports on the balance of payments. The medium-term outlook remains positive in view of favorable investment prospects," he said.
The IMF official pointed out that continued sound fiscal and monetary policies remain key to maintaining macroeconomic stability and external competitiveness, against the background of large-scale foreign exchange inflows and upside inflationary risks. A tighter-than-budgeted fiscal
stance is warranted for 2008 as this would deliver welcome support to monetary policy in keeping inflation expectations well anchored.
The existing monetary policy framework, based on a flexible exchange rate, remains the best option for Armenia., Portugal said. "The authorities' timely monetary policy actions over the past year have demonstrated the authorities' commitment to price stability and helped contain inflationary expectations despite strong headwinds from higher world food and energy prices," he said.
Portugal stressed that strengthening the capacity for fiscal policy analysis will be important for improving the effectiveness of fiscal policy and helping maintain fiscal discipline. Increasing revenue collections in a transparent and nondiscretionary manner will also be crucial, in view of the need to improve the country's infrastructure, reduce poverty, and improve the business environment.
The authorities intend to press ahead with their structural reform agenda to remove remaining bottlenecks to broad-based growth and to safeguard competitiveness.
"Future reform efforts will appropriately focus on deepening productivity-enhancing structural reforms, notably by reducing the cost of doing business, boosting domestic competition, diversifying the economy, and discouraging participation in the shadow economy," Portugal said.
He pointed out that the IMF welcomes Armenia's interest in continuing its close cooperation with the Fund after the current PRGF arrangement expires in May 2008. Over the last 18 years, the IMF has allocated $360mln to Armenia, with 80% of the loans carrying an annual interest rate of 0.5 percent and being repayable over 10 years with a 5½ year grace period on principal payments.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Minister Sees Continued Robust Growth
By Anna Saghabalian
The Armenian economy will continue to grow strongly this year despite recent political turmoil, Minister of Economy Nerses Yeritsian said on Wednesday.
According to official statistics, Armenia's Gross Domestic Product increased by 13.7 percent in 2007, its sixth consecutive year of double-digit expansion. The growth rate slowed to 8.9 percent in the first quarter of this year amid the country's worst political crisis in nearly a decade resulting from the disputed presidential election of February 19. But that did not prevent the Armenian government from registering a further sizable increase in its tax revenues.
Yeritsian downplayed the negative impact of the crisis on short-term growth prospects, predicting a full-year GDP growth of at least 8 percent for 2008. `Our investment projects will allow us to maintain the high growth rate in the coming years,' he said.
`The investors with whom we are talking have not changed their plans much,' Yeritsian told a news conference. `Of course, they are asking some questions and we must make additional efforts to assure them that the situation hasn't changed, that the [government's economic] policy is continuing and that we are going to implement new programs.'
Yeritsian cautioned, however, that growth will inevitably slow down in the longer term due to objective factors. `That will be natural because rich countries grow more slowly than more low-income ones,' he explained.
While admitting the uneven distribution of its benefits, the government maintains that recent years' growth has considerably boosted living standards in Armenia. Government figures show that the proportion of Armenians living below the official poverty line has fallen from over 50percent to below 30 percent between 2001 and 2006.
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MINISTRY OF ECONOMY TAKES STEPS ON CREATION OF VENTURE FUND
Noyan Tapan
May 21, 2008
YEREVAN, MAY 21, NOYAN TAPAN. The RA ministry of economy has developed a draft document, in which, based on experience of Poland and Hungary, the idea of creating a venture fund with mixed capital is put forward. The draft has not yet been discussed by the sector's
companies and the Armenian government, the RA minister of economy Nerses Yeritsian said when presenting, at the invitation of the Club of Economic Journalists, the economic provisions of the 2008-2012 program of the Armenian government.
He reminded about the provision of the draft concept of development of Armenia's IT sector, according to which a venture fund with capital of up to 700 mln dollars shall operate in the IT sector of Armenia 10 years after the concept's adoption.
In accordance with international experience, the state's share makes up to 20% of the venture funds in various sectors, while the remaining share is private. The ministry's research showed that the Armenian venture fund should have capital of at least 30 mln dollars in order
to have skilful management and ensure the profit of venture financing.
N. Yeritsian said that a conference on development of Armenia's IT sector will be held in Silicon Valley in October 2008. The issue ofan Armenian venture fund will also be considered at the event. "The subject of investors' interest may be the realization of the whole concept of IT sector's development through business participation rather than of the idea of a venture fund. At the moment there is some optimism regarding this issue," he said.
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Noyan Tapan
May 21, 2008
YEREVAN, MAY 21, NOYAN TAPAN. The RA ministry of economy has developed a draft document, in which, based on experience of Poland and Hungary, the idea of creating a venture fund with mixed capital is put forward. The draft has not yet been discussed by the sector's
companies and the Armenian government, the RA minister of economy Nerses Yeritsian said when presenting, at the invitation of the Club of Economic Journalists, the economic provisions of the 2008-2012 program of the Armenian government.
He reminded about the provision of the draft concept of development of Armenia's IT sector, according to which a venture fund with capital of up to 700 mln dollars shall operate in the IT sector of Armenia 10 years after the concept's adoption.
In accordance with international experience, the state's share makes up to 20% of the venture funds in various sectors, while the remaining share is private. The ministry's research showed that the Armenian venture fund should have capital of at least 30 mln dollars in order
to have skilful management and ensure the profit of venture financing.
N. Yeritsian said that a conference on development of Armenia's IT sector will be held in Silicon Valley in October 2008. The issue ofan Armenian venture fund will also be considered at the event. "The subject of investors' interest may be the realization of the whole concept of IT sector's development through business participation rather than of the idea of a venture fund. At the moment there is some optimism regarding this issue," he said.
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