May 19, 2020 / 11:36 AM / 17 days ago

IMF increases Armenia's three-year financing to $280 mln

TBILISI, May 19 (Reuters) - The International Monetary Fund has completed its second review of Armenia’s performance under a three-year $248 million programme and approved the government’s request for increased access to financing, the IMF said on Tuesday.

“The augmentation and completion of the review will make (a total of) about $280 million immediately available,” an IMF statement said. The Stand-by arrangement, consisting of a series of loans, was launched in 2019.

The IMF said its financial assistance would help the former Soviet republic solidify growth and cope with the economic fall-out from the coronavirus pandemic.

Finance Minister Atom Janjughazyan said last month Armenia’s economy was likely to shrink 2% in 2020 under the impact of the coronavirus, slashing the government’s earlier forecast of 4.9% growth.

He said the government expected to run a budget deficit of about 324 billion dram ($670 million), equivalent to about 5% of GDP this year.

The IMF said last month Armenia’s economy was expected to contract by 1.5% this year, rather than grow 4.8% as originally forecast, “given COVID-related restrictions on domestic mobility and activity, substantially lower external demand, tighter financial conditions, and disruptions in global trade and supply chains”.

The country’s fiscal deficit is projected to widen markedly in 2020, the IMF said, “reflecting the impact of the cycle on revenues and higher current spending for health care and economic support to vulnerable households and firms”.

Armenia, a nation of some 3 million people, has confirmed 5,041 cases of COVID-19 and 64 deaths from the respiratory disease, the highest toll in the South Caucasus region. (Reporting by Margarita Antidze and Nvard Hovhannisyan; Editing by Mark Heinrich)

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