IMF Supports Armenia’s Reform Agenda with Continued Financial Backing Under SBA

Armenia's economy demonstrated resilience and strength throughout 2024, with real GDP growth reaching 5.9%, driven largely by solid domestic consumption and private investment.

The International Monetary Fund (IMF) and the Armenian government have successfully concluded a staff-level agreement as part of the fifth review under the existing three-year Stand-By Arrangement (SBA). This arrangement, which Armenia treats as precautionary, is a cornerstone in the country’s broader economic strategy to maintain macroeconomic stability and promote sustainable, inclusive growth.

The agreement was reached during an IMF mission led by Iva Petrova, which took place in Yerevan from March 31 to April 10, 2025. The agreement is pending approval by the IMF’s Executive Board in June. Once approved, Armenia will have access to an additional US$ 25.0 million (SDR 18.4 million), bringing the total funds available under the SBA to US$ 149.9 million (SDR 110.4 million) since its inception.

Strong Economic Performance in 2024

Armenia's economy demonstrated resilience and strength throughout 2024, with real GDP growth reaching 5.9%, driven largely by solid domestic consumption and private investment. Inflation has remained under control, reaching 3.3% year-on-year in March 2025, aligning with expectations set by the Central Bank of Armenia (CBA).

Employment figures show continued improvement, while Armenia’s fiscal performance remained prudent. The fiscal deficit was capped at 3.7% of GDP in 2024, and the central government debt held steady at a moderate 48.3% of GDP. The current account deficit widened to 3.9% of GDP due to a slowdown in trade, tourism, and remittance inflows.

Armenia’s banking sector remains robust, characterized by high profitability and ample capital and liquidity buffers.

Outlook for 2025 and Key Challenges

Looking ahead, Armenia’s economic growth is projected to moderate to 4.5% in 2025, a level consistent with its potential output. This slight deceleration is attributed to waning external growth drivers amidst ongoing global trade tensions and regional geopolitical uncertainties. Inflation is expected to hover around the CBA’s target by the end of 2025.

The IMF has underscored risks to the outlook, citing potential volatility stemming from geopolitical shifts, which could influence capital flows and currency stability.

Fiscal and Structural Reform Agenda

The Armenian government’s medium-term expenditure framework is designed to balance developmental needs with fiscal responsibility. The 2025 budget targets a deficit of 5.5% of GDP to accommodate strategic spending in national security, refugee integration, and infrastructure.

To achieve this, the IMF emphasized the importance of sustained revenue mobilization and strategic expenditure prioritization. Implementation of newly introduced tax measures and enhancements in revenue administration will be pivotal. Structural improvements to fiscal planning, governance, public investment management, and fiscal risk oversight are also key reform components.

Continued Support from the IMF

Ms. Petrova reiterated the IMF’s confidence in Armenia’s reform trajectory. “The authorities’ medium-term fiscal and structural plans demonstrate a commitment to both economic stability and social progress. Effective implementation of these measures will be vital for long-term sustainability.”

The IMF also commended Armenia’s prudent monetary policy, stating that the current stance remains appropriate given subdued inflation. However, flexibility in policy responses will be critical should inflation expectations deviate from targets.

Commitment to Inclusive Growth

Structural reforms aimed at enhancing resilience and inclusion remain a focal point. The Armenian government’s initiatives to expand labor market participation—particularly among vulnerable groups—alongside efforts to diversify exports and improve corporate transparency, are seen as essential for deepening economic inclusiveness.

Plans to revamp the insolvency framework and foster better access to finance were also highlighted as steps toward promoting quality investments and long-term development.

 

The IMF's continued support through the SBA underscores a shared commitment to Armenia's economic stability and reform agenda. While challenges remain, particularly in navigating uncertain global dynamics, Armenia’s progress thus far positions it well for sustained growth and resilience in the coming years.