YEREVAN, April 28. /ARKA/. An International Monetary Fund (IMF) team led by Iva Petrova visited Yerevan from March 31 to April 10, 2025, to conduct discussions for the fifth review under the Stand-By Arrangement (SBA) with Armenia. At the conclusion of the discussions, Ms. Petrova issued the following statement:
“I am pleased to announce that the IMF team and the Armenian authorities have reached a staff-level agreement on policies for the completion of the fifth review under the three-year SBA, which supports Armenia’s economic reform program. The agreement is subject to approval by the IMF’s Executive Board, scheduled to consider this review in June. This approval would enable access of about US$ 25.0 million (SDR 18.4 million), bringing total access to about US$ 149.9 million (SDR 110.4 million) since the SBA’s inception.
“Armenia’s economic activity remains robust, with real GDP growth of 5.9 percent in 2024, driven by robust consumption and investment. Employment growth has been steady, and inflation remains subdued, gradually picking up to 3.3 percent year-on-year in March 2025 in line with expectations. The current account deficit widened somewhat to 3.9 percent of GDP in 2024 as inflows from trade, tourism, and remittances continue to decelerate. The 2024 fiscal deficit was limited at 3.7 percent of GDP, keeping central government debt moderate at 48.3 percent of GDP. The banking system has high profitability and strong capital and liquidity buffers.
“Real GDP growth is expected to remain generally strong but return to its potential of 4.5 percent in 2025 as trade and services normalize. Inflation is expected to remain around the Central Bank of Armenia’s (CBA) target by end-2025. Risks to this outlook stem from the unprecedented uncertainty related to the ongoing global trade tensions and potential slowdown in the growth of trading partners. Regional geopolitical shifts, which could lead to a reversal of recent capital inflows and FX volatility, also weigh on the outlook.
“The authorities’ upcoming medium-term expenditure framework aims to preserve macro-fiscal stability while supporting Armenia’s development needs. In this context, the 2025 budget deficit target of 5.5 percent of GDP remains appropriate, accommodating priority spending needs, including national security, refugee integration, and infrastructure development. However, with rising spending pressures, creating fiscal space while ensuring a gradual fiscal consolidation, would require careful expenditure prioritization, implementation of recently introduced tax policies and further revenue administration efforts. Reforms to strengthen medium-term fiscal planning, enhance public financial management—including through robust fiscal risk management, transparency, and governance—and bolster the public investment management framework remain critical to support fiscal sustainability.
“Amid subdued inflationary pressures and anchored inflation expectations, the current monetary policy stance is appropriate. In view of the significant uncertainty, the Central Bank of Armenia (CBA) should continue to monitor closely economic developments and inflation expectations and stand ready to adjust policy rates if inflation expectations drift away from target. The flexible exchange rate remains a key shock absorber, and the authorities’ commitment to maintaining healthy international reserve buffers is welcome. The CBA continues to monitor vigilantly financial sector risks and to upgrade its supervisory toolkit and capacity.
“Structural reform efforts should continue to strengthen economic resilience and foster inclusive growth. The authorities’ plans to boost labor force participation among vulnerable populations, encourage diversification in the country’s export basket and markets, and improve corporate transparency and access to finance are welcome. Achieving these objectives requires timely and effective implementation of the employment and export strategies, prioritizing governance reforms, and upgrading the insolvency framework to support quality investments.
“The IMF team thanks the Armenian authorities, private sector, development partners, and the diplomatic community for fruitful discussions and cooperation.”-0-
