OREANDA-NEWS. The Executive Board of the International Monetary Fund (IMF) completed the sixth and final review of Armenia's economic performance under a program supported by Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements. The completion of the review allows the authorities to draw an additional SDR 55 million (about USD 84 million), bringing total disbursements under the arrangements to the full SDR 266.8 million (USD 407.2 million) available. The three-year EFF and ECF arrangements with Armenia were approved by the IMF's Executive Board on June 28, 2010 (see Press Release No. 10/263). The Board's decision on the sixth review was taken on a lapse of time basis.1

Policies have largely delivered on the objectives of the EFF/ECF-supported program, which concludes in September. Growth reached 4.7 percent in 2011, 7.2 percent last year, and continues to be strong in 2013. Inflation has remained below the CBA's 4 percent target, and shocks have been short-lived. The Central Bank of Armenia (CBA) has permitted greater flexibility of the dram over the past year, rebuilt reserves following sizeable intervention May-June 2012, and strengthened the monetary framework and operations. The CBA has also moved decisively to implement Financial Sector Assessment Program and IMF technical assistance recommendations. Banking sector indicators remain sound. The reduction of the fiscal deficit over the past three years, which has included substantial tax revenue increases, has reestablished fiscal sustainability and contributed to external adjustment.

At the same time, significant challenges and vulnerabilities remain. Robust growth has resumed, but has reflected in part rapid growth of credit and consumption, favorable weather, and high metals prices. More progress is needed to continue the external adjustment, reduce poverty, further restore buffers, and enhance the business climate and private sector- and export-led growth. Implementation of the authorities' stated policy plans should help address these challenges and vulnerabilities.