On 17 March 2022 the IMF published a report following discussions with Armenia in relation to the sixth and final review of the economic program which is supported by a three-year IMF stand-by arrangement (SBA).

Armenia is in a stronger economic position but there are challenges arising from the geopolitical situation. Growth was 5.7% in 2021 and has continued strongly in 2022.

The report notes that there is still considerable uncertainty about the impact that the geopolitical crisis, including the sanctions on Russia, will have on Armenia, but a preliminary projection is that growth will be around 1.5% in 2022, considerably lower than previous projections.

The IMF considers that Armenia should prioritise the preservation of financial stability and continue with reforms to facilitate stronger growth. The broader objectives include tax policy and administration reforms to further broaden the tax base.

To ensure that the economic shock does not further worsen the budget deficit and the government debt-to-GDP ratio, Armenia can use its expenditure reserve fund prudently, and cut non-priority spending. Government support for vulnerable households and viable businesses should be targeted and continued for a limited period.

The IMF report encourages Armenia to continue the strong policy and reform efforts. These should aim to safeguard financial stability and deliver green and inclusive economic growth. A progressive mining taxation regime should be introduced, moving away from price-based royalty schedules and ad-hoc export duties which could have the effect of discouraging investment in the mining sector.  

The report also notes that Armenia must strengthen fiscal transparency and governance; and improve the business environment. Further fiscal space can be created by means of growth-friendly tax policies to enhance revenue; prioritisation of current spending; quality public investment; and more social protection.