The International Monetary Fund (IMF) Executive Board has completed the fourth review under the Stand-By Arrangement (SBA) with Armenia. This review allows Armenia to access Special Drawing Rights (SDR) of 18.4 million, equivalent to approximately US$24.12 million, bringing the total accessible amount to SDR 92.0 million or about US$120.59 million. The arrangement, initially approved on December 12, 2022, remains precautionary for Armenian authorities.
Armenia's economic outlook remains positive despite recent challenges. Real GDP growth is projected at around 6% in 2024 and expected to moderate to approximately 5% in 2025, eventually slowing down to about 4.5% over the medium term unless structural reforms accelerate growth potential. Inflation is predicted to stay below the Central Bank of Armenia's target in the short term but gradually increase towards it over time.
Program performance is generally on track as all quantitative criteria and targets for June 2024 were met, although lower-than-expected inflation breached a monetary policy clause band. A budget for 2025 with a fiscal deficit of 5.5% of GDP aligns with program needs while addressing urgent spending requirements, with plans for fiscal consolidation resuming in 2026.
Following discussions by the Executive Board, Mr. Bo Li, Deputy Managing Director and Acting Chair stated: “Armenia’s economic outlook is positive, with robust growth and low inflation." He emphasized that "sustained prudent policies and reform efforts remain critical" amidst an uncertain environment.
The Armenian government plans measures such as strengthening revenue mobilization and adopting a medium-term expenditure framework while progressing public financial management reforms to mitigate fiscal risks associated with state-owned enterprises and partnerships.
The monetary policy stance was deemed appropriate by Mr. Li: "Further policy rate decisions should continue to be guided by the outlook for inflation." The banking system's soundness continues as authorities monitor financial sector risks from real estate markets while maintaining capital buffers and enhancing supervisory powers.
Mr. Li also noted that advancing structural reforms would bolster sustainable growth: “Continued efforts to boost labor market participation...are important.” Reforms aimed at export diversification, improving business environments, governance strengthening, and climate policy advancement are seen as crucial steps toward enhancing resilience and increasing potential growth.