Armenia: A new IMF Agreement secured
Overview:
The Armenian authorities secured a Poverty Reduction and Growth Facility (PRGF) with the IMF in November following the successful conclusion of two earlier such agreements. However, the economic circumstances facing Armenia are now much more adverse for growth and the balance of payments than envisaged when that program was designed. Growth has turned negative and a deteriorating balance of payments situation has put downward pressure on both the currency and the level of foreign exchange reserves. In response, the authorities have secured a 28-month US$540 million Stand-By Arrangement (SBA) with the IMF with an initial disbursement of US$237 million. A key part of this new agreement is acceptance of a floating exchange rate which has led to a sharp 20% depreciation of the dram.