WASHINGTON (Reuters)–The International Monetary Fund said on Tuesday it approved a $59 million loan to help Armenia address the spillover effects of Russia’s financial crisis.
The credit–which is about $11 million more than previously announced–was part of a $154 million–three-year loan under the IMF’s Enhanced Structural Adjustment Facility.
The IMF said the loan was part of an international effort to help Armenia and neighboring countries address the balance-of-paymen’s difficulties resulting from the Russian crisis.
Despite the Russia problems–the IMF said it expected Armenia to achieve 5.5 percent real GDP growth this year and 4 percent in 1999. It said it projected single-digit inflation in both years and a decline in the current account deficit to 22 percent of GDP next year from 24 percent in 1998.
The government had planned measures to absorb about half of the external shock from the Russia crisis–with the balance cushioned by the international donor effort–the IMF said.
The former Soviet republic of 3.8 million people began experiencing the adverse effect of the Russia crisis in August.
Net exports to Russia and net transfers from Armenian workers in Russia have fallen sharply–while financing from Russia has been delayed and some private investment canceled.
"The crisis is beginning to affect important trading partners of Armenia in the region–adding to the overall impact.
"Armenia’s medium term prospects underscore the need to act decisively to restore conditions for sustained high growth–higher domestic savings–and a stronger official international reserve position," the IMF said.