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Real GDP growth rebounded strongly in 2021 and early 2022, driven by a pickup in construction, trade, and services activities, and benefiting from strong policies and a gradual improvement of the pandemic, notwithstanding its various waves. In 2022, the budget aimed at continuing a gradual fiscal consolidation, while still providing temporary and targeted support to the economy, and monetary policy aimed at continuing its tightening cycle that started in late-2020 to cool down inflation. The favorable near-term outlook, however, is set to be interrupted by the spillovers from the war in Ukraine and the sanctions against Russia, given Armenia’s economic links and exposure to the Russian economy. Growth has been revised down markedly this year, while inflationary pressures are expected to persist, keeping inflation above the Central Bank of Armenia’s (CBA) target in 2022.
The economic and social impact of the COVID-19 pandemic over the past year has been well-managed by the authorities. Timely and prudent fiscal and monetary easing shielded the economy from the full brunt of the crisis, while alleviating the health and social impact of the shock. Sound economic policies helped deliver macroeconomic stabilization, safeguard debt sustainability, and preserve investor confidence. While growth is expected to rebound in FY2021/22, the outlook is still clouded by uncertainty related to the pandemic and the pace of vaccinations. High public debt and large gross financing needs leave Egypt vulnerable to external shocks or changes in financial market conditions for EMs. Near-term fiscal and monetary policies should thus continue to support the recovery without accumulating undue imbalances.
The audited consolidated financial statements of the International Monetary Fund as of April 30, 2019 and 2018
The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

Barbados

International Monetary Fund. Western Hemisphere Dept.

Published: 2018-10-04

Total Pages: 90


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The key objectives of the program are to restore macroeconomic and debt sustainability, address falling reserves, and increase growth. The new government, which took office in late May, has committed to fiscal consolidation and structural reform as key tools for macroeconomic adjustment.
This Selected Issues paper analyzes scope for further de-dollarization policies in Armenia. High financial dollarization makes Armenia more vulnerable to external shocks and limits its capacity to respond. The de-dollarization strategy is broad and comprehensive, and has achieved a reduction of deposit dollarization during the past few years. Additional efforts should focus on reducing inflation volatility and external imbalances, using prudential regulations to increase foreign currency liquidity in the banking system, and strengthening the monitoring of currency mismatches. International experience suggests, however, that further reductions in dollarization are likely to occur only gradually.
A recovery is underway, but the economic fallout from the global pandemic could be with us for years to come. With the crisis exacerbating prepandemic vulnerabilities, country prospects are diverging. Nearly half of emerging market and developing economies and some middle-income countries are now at risk of falling further behind, undoing much of the progress made toward achieving the UN Sustainable Development Goals.
The Stand-By Arrangement (SBA) is off to a good start, and the economic outlook is generally positive. Real GDP growth reached 12.6 percent in 2022, driven by robust consumption and a surge in inflow of income, capital, business, and labor. Growth is expected to decelerate but remain robust in 2023. Headline inflation fell to 3.2 percent (year-on-year) in April, including due to base effects, lower food inflation, dram appreciation, and monetary policy tightening. Risks to the outlook are elevated, requiring the continuation of strong policies to build resilience further.
This paper discusses Republic of Armenia’s Second Review Under the Stand-By Arrangement, Requests for Augmentation of Access, Modification of Performance Criteria, and Monetary Policy Consultation Clause. Following a strong performance in 2019, the Armenian economy was hit hard by the coronavirus disease 2019 pandemic. The government has proactively responded to the crisis, adopting widespread containment measures while supporting vulnerable individuals and firms in the most affected sectors. The fiscal deficit is projected to widen considerably in 2020, reflecting the impact of the cycle on revenues and higher current spending for healthcare and economic support to vulnerable households and firms. 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. The augmentation of access under the Stand-by Arrangement will provide much needed support, allowing the authorities to mitigate the pandemic and support affected households and businesses.
Armenia has commenced a robust recovery from the deep 2020 recession, benefiting from strong policies and the lifting of the political uncertainty after the elections in June. A gradual but uneven improvement in the pandemic situation, pent-up demand, and the strengthening of public and private investment are expected to drive 2022 growth. Robust growth is expected over the medium term. Risks. Risks are relatively balanced, although uncertainty remains high. Strong reform implementation and accelerating vaccinations could improve the outlook, while risks of a protracted pandemic, renewed geopolitical tensions, a slowdown in major trading partners, and stress from global financial volatility and/or trade tensions could hamper the recovery.