IMF Praises Reduction of Poverty in Armenia

YEREVAN (RFE/RL)–An International Monetary Fund official Wednesday praised as striking the reduction in poverty that has been achieved in Armenia.
The statemen’s came ahead of
the IMF’s final disbursement of a $5.4 million installment of a three-year loan package to Armenia for supporting the government’s efforts at reducing poverty and maintaining macroeconomic stability.
The $37.3 million loan, called the Poverty Reduction and Growth Facility (PRGF), was approved in May 2005 and has since been allocated to the Armenian government in six installmen’s.
In a statement made public late Wednesday, the Deputy Managing Director of the IMF, Murilo Portugal, praised the Armenian government for its "prudent macroeconomic policies" and "structural reforms" advocated by the fund.
"A marked reduction in poverty has been achieved in a high-growth and low inflation macroeconomic environment," Portugal said. "Strong remittance and foreign direct investment inflows have dampened the impact of rapidly rising imports on the balance of paymen’s."
"The medium-term outlook remains positive in view of favorable investment prospects," he added.
The IMF official urged the authorities in Yerevan to stick to "sound" fiscal and monetary policies. He said a further reduction in poverty is also contingent on improving tax collection and the business environment.
Ever since its independence Armenia has borrowed from the IMF a total of about $400 million in various low-interest loans repayable over 10 years. They have been used for shoring up its hard currency reserves and financing budget deficits.
The importance of budgetary loans provided by the IMF and the World Bank has decreased in recent years parallel to the robust growth of the Armenian economy and a sizable increase in tax revenues. The government will for the first time finance most of its projected budget deficit from domestic sources this year.
Earlier in the week, Armenian Labor and Social Affairs Minister Aghvan Vartanian announced that Armenia’s Government will work to further narrow the gap between the country’s rich and poor by reducing poverty levels to match those of the world’s developed countries.
According to its program, the Government will seek reduce by 2012 Armenia’s poverty level to 11.2 percent and its extreme poverty level to 1.6 percent, explained Vartanian during a press conference on Tuesday.
Vartanian, who is also a member of the Armenian Revolutionary Federation’s parliamentary bloc, explained that in 1997, Armenia’s poverty level was at 56.1 percent, while extreme poverty was at 21%, he explained. By 2006, those numbers had greatly dropped with 26.5 percent of Armenia’s population living in poverty and only 4.1 percent in abject poverty.
The government is also planning to direct 6.2 percent of the country’s GDP to social security, Vartanian said.
Stressing the need to make social services more accessible to an even greater number of people, Vartanian explained that the Government’s goal is to increase by 2012 the average pension level to the level of subsistence.
The activities of the ministry in this regard are being conducted in a transparent and public manner, he told noted.
Vartanian explained that the Ministry of Labor and Social Affairs is also concentrating on achieving the government’s goal to reach real gender equality in the country.


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