On December 11, the Executive Board of the International Monetary Fund (IMF) completed the third review of the Republic of Armenia’s performance under the program supported by the Stand-By Arrangement (SBA). The completion of the review will make budget funds in the amount of SDR 25.714 million (about USD 36.7 million) available for the Republic of Armenia, bringing total disbursements to SDR 231.657 million (about USD 315 million).
According to IMF assessments, monetary policy has rightly been accommodative, supporting the economy and keeping the banking sector liquid. Inflation remains low, with the exchange rate relatively stable over much of this year. Nevertheless, according to the IMF Executive Board, the Central Bank of Armenia should carefully monitor market developments and stand ready to adjust its monetary policy stance, as necessary, to preserve macroeconomic stability, while maintaining exchange rate flexibility to absorb shocks under its inflation targeting framework.
According to IMF, while the financial system has not shown signs of stress, the Central Bank of Armenia should continue to identify vulnerabilities and risk factors in the banking system and stand ready to take relevant regulatory actions.
The representatives of the Fund responded positively to the fact that the socio-economic shocks did not have a significant negative impact on the financial system. According to them financial sector reforms, some of which are underway, will support the recovery and long-term growth. In the conditions of military operations and pandemic, facing serious socio-economic and security challenges, the Armenian authorities managed to take immediate healthcare and anti-crisis measures to limit their impact while protecting vulnerable groups and safeguarding sustainability, as well as macroeconomic and financial stability, and thus mitigating the socio-economic and health effects of these shocks.
According to the IMF report, implementation of the authorities’ structural reform agenda remains critical to support the economic recovery and promote inclusive growth.