Armenia May Get Extension in IMF ESAF Program Term

YEREVAN(Noyan Tapan)–.Armenia may get an extension in the term of the third year of ESAF program the IMF resident representative said.

George Anayiotos told a Noyan Tapan reporter that the program scheduled to be finished in February 1999–may be extended by the IMF Board as the political changes in the country caused some delay–and the IMF has to put together the ESAF program with the new administration.

The third year ESAF program would provide Armenia with a concessional loan of some 16 million drams.

An IMF mission visited Armenia and made progress in putting together a new program for the third year of ESAF. Anayiotos said–that a second round of discussions is to take place later this year and in the meantime–the government is working with the permanent representative office.

Noting the recent data showing decline in inflation and resuming of economic growth–Anayiotos said the these trends are "welcomed". The IMF does not share–however–the opinion that special measures are to be undertaken to stimulate inflation.

"There shouldn’t be any fears about deflation. It is very different here from the growth-inflation trade-off of the Western economies. In transition economies we have a dynamism of increasing productivity and output through structural changes that support growth. Low inflation is conducive to growth. The ESAF program supports structural changes in different sectors of economy," Anayiotos said.

In fact there still exists an issue of controlling broad money aggregates–although the Central bank has made some progress in this direction–he added.

A coordination between the monetary policy and the fiscal policy is also needed. "We will analyze the implication of expenditures–be it the payment of additional subsidies for drinking water–pensions etc.–as we review the 1998 budget. And then–of course–in the context of further structural reforms–such as privatization–civil service reform–energy sector–we will take into consideration their implication of the budget," he added. He mentioned that some improvement was observed during the last period in the sphere of revenues collection and the problem of efficiency of the expenditures is now of primary importance.

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