IMF Approves $280 Million in Emergency Funding for Armenia

WASHINGTON, DC — The International Monetary Fund disbursed on Monday a $280 million emergency loan designed to help Armenia cope with the coronavirus outbreak and mitigate its economic consequences.

“The impact of the COVID-19 pandemic and the tightening of global financial conditions have disrupted Armenia’s above-trend growth and favorable economic conditions,” the IMF said after a meeting of its Executive Board held in Washington.

“The near-term outlook has significantly weakened, with fiscal and current account deficits widening considerably this year,” it said. “The Fund’s financial support will help Armenia meet these challenges, including the urgent social and economic implications of COVID-19 pandemic.”

Yulia Ustyugova, the fund’s resident representative in Yerevan, announced the impending release of the loan in an April 27 interview with RFE/RL’s Armenian service.
Ustyugova said the sum includes a $248 million “stand-by arrangement” which was allocated to the Armenian authorities in May 2019 but has not been used by them until now. The authorities have requested additional IMF funding because of the coronavirus crisis, she said.

The Armenian government plans to borrow this year around $540 million from various external sources for cushioning the impact of an unfolding economic recession in the country. Finance Minister Atom Janjughazyan has said it needs to offset a major shortfall in tax revenues and to continue financing its ongoing efforts to stem the spread of the virus.

Earlier this month the Armenian parliament approved corresponding changes to the 2020 state budget proposed by the government. They will lead to a much larger budget deficit than was projected before the pandemic.

“The authorities are committed to pursuing their medium-term goal of debt sustainability once the crisis abates, and public debt is expected to decline over the medium-term in line with Armenia’s fiscal rule, while maintaining space for investment and social spending,” Tao Zhang, the IMF’s deputy managing director, said in this regard.

In its World Economic Outlook released last month, the IMF forecast that the Armenian economy will shrink by 1.5 percent this year. It warned that a prolonged COVID-19 pandemic would lead to a sharper GDP contraction.