YEREVAN (RFE/RL) — The International Monetary Fund has slightly improved its outlook for the Armenian economy but still thinks that it will not grow this year, the IMF’s resident representative in Yerevan, Teresa Daban Sanchez, said on Tuesday.

In the most recent World Economic Outlook published in April, the IMF forecast that Armenia’s Gross Domestic Product will likely shrink by 1 percent in 2015 due to knock-on effects of a recession in Russia.

According to Daban Sanchez, the fund now expects zero growth in the country. She argued that oil prices stabilized in February, somewhat shoring up the Russian ruble. This should reflect positively on the Armenian economy, she said.

“We have moved from the minus one [growth] to the zero,” the IMF official said. She went on caution, though, that even this economic outlook is fraught with “huge uncertainty.”

The Armenian government has publicly disagreed with such gloomy projections. Prime Minister Hovik Abrahamian last month forecast an economic growth rate of “at least 2-3 percent.” He claimed that it could even reach 4 percent.

“This is not the first time we have differences with the government,” Daban Sanchez told reporters. “We had them in the past. We have that in other countries. It’s OK.”

Daban Sanchez reaffirmed the IMF view that the government should seek to offset the fallout from the Russian economic downturn with more aggressive reforms that would significantly improve Armenia’s flawed business environment. “Armenia needs a more dynamic economy,” she stressed. “That means more competition, more players, better rules of the game … a justice system that is fair.”

“That’s what’s working in other countries and what’s not working in Armenia,” the IMF representative went on. While the situation with the rule of law has seemingly improved over the past decade “we are still below where Armenia should be,” she added.

The president of the European Bank for Reconstruction and Development, Suma Chakrabarti, also called for such reforms when he visited Yerevan last month. He said the Armenian authorities should boost competition and create a level playing field for all businesses.

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