Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the sixth and final review under the Stand-By Arrangement with Armenia. The completion of the review will allow the authorities to draw SDR 25.716 million (about US$35 million), bringing total disbursements to SDR 308.8 million (about US$415 million) under Armenia’s three-year SBA. The SBA was approved by the IMF’s Board on May 17, 2019 and augmented on May 18, 2020 (see Press Release No. 19/173 and Press Release No. 20/219). The Executive Board’s decision was taken without a meeting. [1]
The 3-year Stand-By Arrangement, approved in May 2019, comes to an end on May 16, 2022, after the conclusion of this review. Notwithstanding various domestic and external shocks that hit the economy over the past three years, program performance has been satisfactory and important structural reforms have been advanced.
Armenia’s economy continued to recover in 2021 and early 2022, largely thanks to the authorities’ economic management efforts. They persevered with strong policy implementation and remained proactive to adjust policies appropriately to unforeseen developments. More generally, over the three-year program, the authorities advanced important structural and institutional reforms, including on improving tax compliance, refining the budget process, strengthening the inflation targeting framework and supporting financial sector stability, as well as implementing reforms to strengthen governance, foster transparency, and combat corruption. A flexible exchange rate is more entrenched within the country’s policy framework. The authorities have also developed an ambitious medium-term reform program that, if successfully implemented, could lead to stronger and more inclusive growth.
The economic outlook for 2022 is subject to high uncertainty due to the spillovers from the war in Ukraine. Despite the strong momentum in early 2022, economic growth is projected to slow down to about 1.5 percent this year, primarily owing to lower consumption and contraction in trade. Inflation is expected to remain elevated on account of higher import prices, particularly food and oil, and the current account is expected to widen as the economy adjusts to shocks. In this regard, the CBA’s recent policy tightening signals its strong commitment to contain inflationary pressures and anchor inflation expectations. Its ongoing supervisory initiatives would also help preserve financial stability. Fiscal space should be used prudently to mitigate the adverse impact of the war in Ukraine on the economy, while continuing to support the authorities’ medium-term fiscal consolidation efforts.
| Table 1. Armenia: Selected Economic and Financial Indicators, 2019–27 | ||||||||||||||
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | ||||||
| Act. | Act. | Act. | Proj. | |||||||||||
| National income and prices: | ||||||||||||||
| Real GDP (percent change) | 7.6 | -7.4 | 5.7 | 1.5 | 4.0 | 4.4 | 4.5 | 4.5 | 4.5 | |||||
| Final consumption expenditure, Contrib. to Growth | 10.7 | -9.7 | 6.0 | 2.1 | 2.8 | 2.7 | 2.4 | 2.3 | 2.2 | |||||
| Gross fixed capital formation, Contrib. to Growth | 0.7 | -1.4 | 1.2 | 0.4 | 1.7 | 1.8 | 2.1 | 2.2 | 2.3 | |||||
| Changes in inventories, Contrib. to Growth | -3.9 | 0.4 | -1.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Net exports of goods and services, Contrib. to Growth | 0.2 | 3.4 | 0.4 | -1.0 | -0.5 | -0.1 | 0.0 | 0.0 | 0.0 | |||||
| Gross domestic product (in billions of drams) | 6,543 | 6,182 | 6,983 | 7,603 | 8,337 | 9,061 | 9,828 | 10,654 | 11,550 | |||||
| Gross domestic product (in millions of U.S. dollars) | 13,619 | 12,641 | 13,928 | 14,047 | 15,842 | 17,258 | 18,377 | 19,726 | 21,251 | |||||
| Gross domestic product per capita (in U.S. dollars) | 4,597 | 4,267 | 4,701 | 4,741 | 5,347 | 5,824 | 6,201 | 6,656 | 7,170 | |||||
| CPI (period average; percent change) | 1.4 | 1.2 | 7.2 | 7.6 | 6.0 | 4.3 | 4.1 | 4.0 | 4.0 | |||||
| CPI (end of period; percent change) | 0.7 | 3.7 | 7.7 | 7.5 | 5.0 | 4.0 | 4.0 | 4.0 | 4.0 | |||||
| GDP deflator (percent change) | 1.0 | 2.0 | 6.9 | 7.2 | 5.4 | 4.1 | 3.8 | 3.7 | 3.7 | |||||
| Unemployment rate (in percent) | 18.3 | 18.1 | 18.5 | 19.5 | 19.0 | 18.5 | 18.0 | 17.5 | 16.5 | |||||
| Investment and saving (in percent of GDP) | ||||||||||||||
| Investment | 17.4 | 18.5 | 16.6 | 17.3 | 18.3 | 18.5 | 19.0 | 19.4 | 19.5 | |||||
| National savings | 10.0 | 14.7 | 12.9 | 11.0 | 12.4 | 12.5 | 13.1 | 13.6 | 13.7 | |||||
| Money and credit (end of period) | ||||||||||||||
| Reserve money (percent change) | 8.8 | 18.3 | 17.1 | 7.0 | 4.1 | 6.0 | 7.4 | 8.4 | 7.5 | |||||
| Broad money (percent change) | 11.2 | 9.0 | 13.1 | 5.8 | 6.4 | 9.7 | 7.4 | 8.4 | 7.3 | |||||
| Private sector credit growth (percent change) | 18.5 | 14.3 | -3.9 | 0.0 | 2.0 | 3.8 | 5.2 | 6.2 | 6.8 | |||||
| Central government operations (in percent of GDP) | ||||||||||||||
| Revenue and grants | 23.9 | 25.2 | 24.1 | 24.5 | 24.9 | 25.2 | 25.3 | 25.7 | 25.9 | |||||
| Of which : tax revenue | 22.1 | 22.0 | 22.1 | 22.3 | 22.6 | 22.9 | 23.1 | 23.5 | 23.8 | |||||
| Expenditure | 24.9 | 30.6 | 28.7 | 28.5 | 27.8 | 27.4 | 27.2 | 27.1 | 27.1 | |||||
| Overall balance on a cash basis | -1.0 | -5.4 | -4.6 | -4.1 | -2.8 | -2.2 | -1.8 | -1.4 | -1.2 | |||||
| Public and publicly-guaranteed (PPG) debt (in percent of GDP) | 53.7 | 67.4 | 63.4 | 67.7 | 65.1 | 63.9 | 62.0 | 59.7 | 57.3 | |||||
| Central Government’s PPG debt (in percent) | 50.1 | 63.5 | 60.1 | 64.9 | 63.0 | 62.2 | 60.8 | 58.8 | 56.6 | |||||
| Share of foreign currency debt (in percent) | 80.6 | 77.0 | 72.7 | 70.5 | 68.8 | 66.8 | 65.5 | 65.1 | 66.0 | |||||
| External sector | ||||||||||||||
| Exports of goods and services (in millions of U.S. dollars) | 5,718 | 3,763 | 4,881 | 5,353 | 5,930 | 6,549 | 7,046 | 7,521 | 7,987 | |||||
| Imports of goods and services (in millions of U.S. dollars) | -7,513 | -5,019 | -6,036 | -6,685 | -7,431 | -8,142 | -8,696 | -9,246 | -9,805 | |||||
| Exports of goods and services (percent change) | 15.7 | -34.2 | 29.7 | 9.7 | 10.8 | 10.4 | 7.6 | 6.7 | 6.2 | |||||
| Imports of goods and services (percent change) | 13.1 | -33.2 | 20.3 | 10.8 | 11.2 | 9.6 | 6.8 | 6.3 | 6.0 | |||||
| Current account balance (in percent of GDP) | -7.4 | -3.8 | -3.7 | -6.3 | -5.9 | -5.9 | -5.9 | -5.8 | -5.8 | |||||
| FDI (net, in millions of U.S. dollars) | 234 | 74 | 354 | 266 | 319 | 389 | 447 | 465 | 479 | |||||
| Gross international reserves (in millions of U.S. dollars) | 2,850 | 2,616 | 3,215 | 2,877 | 2,750 | 2,753 | 2,761 | 2,791 | 2,843 | |||||
| Import cover 1/ | 6.8 | 5.2 | 5.8 | 4.6 | 4.1 | 3.8 | 3.6 | 3.4 | 3.2 | |||||
| End-of-period exchange rate (dram per U.S. dollar) | 480 | 523 | 480.1 | … | … | … | … | … | … | |||||
| Average exchange rate (dram per U.S. dollar) | 480 | 489 | 501.4 | … | … | … | … | … | … | |||||
[1] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
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