An International Monetary Fund (IMF) team, headed by Iva Petrova, visited Yerevan for discussions on Armenia's Stand-By Arrangement (SBA) from March 31 to April 10, 2025. Petrova confirmed the IMF and Armenian authorities reached a staff-level agreement for the fifth review under the three-year SBA which supports Armenia's economic reforms. The agreement awaits approval by the IMF Executive Board, expected in June. If approved, it will grant Armenia access to approximately USD 25 million, increasing the total SBA access to about USD 149.9 million.
Petrova noted, "Armenia’s economic activity remains robust," with a GDP growth of 5.9% in 2024, driven by consumption and investment. Inflation stood at 3.3% year-on-year in March 2025, aligning with projections. The fiscal deficit was 3.7% of GDP in 2024, with government debt at 48.3%. The banking sector showed high profitability with strong capital and liquidity buffers.
Projections indicate GDP growth will normalize to 4.5% in 2025, with inflation around the Central Bank's target by the end of the year. Risks include global trade tensions and regional geopolitical issues affecting capital inflows and foreign exchange stability.
The authorities aim to maintain macro-fiscal stability while addressing development needs in their medium-term expenditure plan. The 2025 budget targets a 5.5% GDP deficit to cover crucial spending like national security and infrastructure. There is a need for prioritized expenditures, tax implementations, and revenue administration to create fiscal space. Ongoing fiscal reforms aim to enhance financial management and investment frameworks to support fiscal sustainability.
The current monetary policy is deemed appropriate amid low inflationary pressures. The Central Bank of Armenia will closely monitor economic and inflation expectations, prepared to adjust policy rates if necessary. The flexible exchange rate supports macroeconomic stability, and maintaining international reserves is critical.
Structural reforms focus on economic resilience and inclusive growth. The plans to boost labor participation, diversify exports, and improve corporate transparency are seen as vital. These require effective implementation of employment and export strategies, governance reforms, and an upgraded insolvency framework.
Petrova expressed gratitude for the cooperation during the discussions, stating, “The IMF team thanks the Armenian authorities, private sector, development partners, and the diplomatic community for fruitful discussions and cooperation.”