IMF Delays Armenia Credit

YEREVAN (Reuter)–The International Monetary Fund has delayed a decision on a $50 million credit to Armenia but remains optimistic about the overall pace of reforms–a fund official said Tuesday. Disbursement of the first $25 million credit due in April or May will be set back until at least June or July–said Susan Jones–IMF resident representative in Armenia. The IMF wanted the government to meet specific first quarter targets on collecting tax arrears from enterprises and on reforming the banking sector–she said. "Essentially we have little left to discuss with the government. If the targets are met–then an IMF delegation will visit from April 30 and will wrap up the package for this year," Jones told Reuters in an interview. But she said the visit would only take place if the targets were met–in which case "there would be a 95 percent chance that the credit would be approved by the IMF board of directors." Jones said she saw little real significance in the slight delay–praising the former Soviet republic’s overall reform effort. "The credit has not been canceled. It can hardly even be called a delay since we are still talking about making the disbursement in the second quarter," she said. "It would have been nice to wrap up the package and pop the champagne corks during the last IMF delegation visit in March–but that is not of great significance. "We simply wanted to give the government more breathing room. I think it will find a way to meet the targets." Jones said the IMF had made recommendations to the government which were being carried out–including making debtor firms sell off part of their assets to pay tax arrears. It also wants the reform of the banking sector–including rules that high-ranking officials of commercial banks should resign from ministerial and senior government posts. The $50 million for 1997 is part of a three-year–$150 million loan. Armenia received $50 million in 1996. Jones called Armenian reforms "a phenomenal success" carried out under difficult circumstances–partially as a result of a nine-year war with neighbor Azerbaijan over territory. She pointed to 1996 inflation of just 5.7 percent–which she said was much lower than the 15-18 percent projected by the IMF at the beginning of the year. The relative stability of the dram currency–which eased only slightly against the dollar from 403 dram to the dollar at the start of the year to 443 at its end–was another strong point. Jones said Armenia–which has a liberal tariff regime–could be the first republic from the former Soviet Union to be admitted to the World Trade Organization and could join later this year. She said the Armenian leadership remained "very committed" to reforms despite the fact that the country has had six prime ministers over the past six years. "They are extremely competent and have worked like demons to get the job done," she said.

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