IMF Says Governance Vital for Recovery

YEREVAN (RFE/RL)–A senior official from the International Monetary Fund on Tuesday added his voice to growing international calls for a more business-friendly environment in Armenia as he met with senior government officials in Yerevan. Echoing the recommendations of other Western donors–John Odling-Smee–director of the IMF’s second European Department–said "improved governance and reduced corruption" is key to the impoverished country’s economic development.

Odling-Smee met with President Robert Kocharian and Prime Minister Andranik Markarian during a two-day visit aimed at assessing the implementation of the government’s three-year economic program. Its approval last May by the Fund’s Board of Directors led to the disbursement of a new IMF loan worth $87 million. It first $13 million trance was made available shortly afterward. The three-year Poverty Reduction and Growth Facility is meant to maintain macroeconomic stability by shoring up the hard currency reserves of the Armenian Central Bank.

Odling-Smee joined an IMF mission which arrived in Yerevan earlier this month and will stay for another week. He said after wrapping up talks with Armenian leaders that the main challenge facing Armenia now is "to put the economy onto a higher sustainable growth path."Everything possible must be done to create a healthy environment for private business–especially new private entities," he said in a public lecture at the American University of Armenia.

Presenting his idea of better governance–the IMF official urged the authorities to further increase the amount of collected taxes–streamline budget expenditures–combat the endemic corruption and improve the investment climate. He also called for better management of remaining state assets–including their privatization.

Speaking to RFE/RL–Odling-Smee said he sees a strong government commitment to move ahead in all those directions. He said: "On privatization they clearly have a program and they are working hard. There has been more privatization in recent months." He added that the recent creation of an anti-corruption government commission headed by Markarian is "another piece of evidence that they are serious about moving in this direction."

The importance of improving the business climate is also strongly emphasized by the World Bank and governmen’s of Western donor states. The bank’s vice-president for Europe and Central Asia–Johannes Linn–made it the central theme of his recent visit Armenia.

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