The International Monetary Fund (IMF) will allocate $22mn to Armenia as part of a three-year programme, the multilateral lender said on June 15 after completing a review of the programme.

Armenia's performance under the $115.6mn three-year arrangement, approved in March 2014, has been broadly satisfactory, despite difficult external conditions, the IMF said. So far, Armenia has received $71mn under the programme and the completion of the review enables the disbursement of the third tranche of $22mn.

Mitsuhiro Furusawa, IMF deputy managing director and acting chair, said in a statement that Armenia's GDP growth has held up moderately thanks to exports of mining and agricultural products, and that monetary conditions have stabilised.

Furthermore, “authorities remain committed to fiscal consolidation and debt sustainability, along with a greater focus on revenue gains to protect and increase capital and social spending. The new tax code, recently submitted to the national assembly, provides a major opportunity to broaden the tax base by reducing exemptions and addressing gaps, and thereby supporting both consolidation and increase in growth-enhancing spending,” Furusawa added.

The IMF also praised the central bank for normalising monetary conditions and bringing inflation closer to the target, and expects a resumption in bank lending. However, it cautioned Yerevan about the need for structural reforms to enhance competition, competitiveness, and ensure that the state budget does not absorb losses or liabilities on behalf of utility or other companies.

The lender was referring to Electric Networks of Armenia (ENA), the power utility that was at the heart of the worst protests in the country in over a decade in 2015. ENA changed owners - Russian state-owned Inter Rao sold it to Russian private conglomerate Tashir Group - but Yerevan was left to pick up the tab for some of the company's debt, which exceeds $220mn. 

“The outlook remains challenging, but the risks to the program are manageable. Steadfast implementation of the agreed set of measures going forward will keep the program on track, rebuild buffers and policy space, and accelerate achieving key reform agenda objectives,” the IMF concluded in the review.