Today the IMF announced that it has approved a $13.6 million three-year arrangement for the Republic of Armenia under the Fund’s Poverty Reduction and Growth Facility (PRGF). The PRGF primarily focuses on centralizing the Fund’s “lending operations to its poorest member countries.”
Armenia has previously received aid under three of PRGF’s supported programs. Although the IMF described as Armenia’s domestic economy as relatively stable in comparison to other developing economies and neighboring states, the aid is intended to help the country withstand the pressures from the current financial market. IMF attributes Armenia’s relative economic stability to “prudent macroeconomic policies and the progress made in structural reforms has helped to achieve these results.”
Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated that, “[c]ontinued sound fiscal and monetary policies remain key to maintaining macroeconomic stability. Prudent policies are necessary to reduce the current macroeconomic imbalances. Current challenges highlight the need to strengthen policy frameworks. The floating exchange rate regime continues to be the best option for Armenia, and the authorities are encouraged to complete the transaction to full-fledged inflation targeting.” The framework of the arrangement is intended to strengthen “the institutional and analytical capacity at the Ministry of Finance, and adopting a Forecasting and Policy Analysis System for inflation targeting at the Central Bank of Armenia.”
Yesterday, the IMF announced its agreement with Serbia to provide $518 million in financial aid under a precautionary Stand-By Arrangement.