An International Monetary Fund (IMF) mission led by Mr. Mark Horton visited Yerevan during March 14-27 to conduct discussions for the Fourth Review of the Extended Fund Facility (EFF)/Extended Credit Facility (ECF) arrangements. The Executive Board of the IMF is tentatively scheduled to consider completion of the review in May 2012. Upon approval the IMF would disburse the fourth tranche of the loan for an amount of about US$56 million, bringing disbursements under the arrangement to SDR 181 million (about US$279 million). At the conclusion of the visit, Mark Horton issued the following statement: "Despite a less supportive external environment, overall macroeconomic conditions have continued to improve. The economy is expected to have grown by 4.4 percent in 2011, driven by strong growth in the industry and services sectors. Inflation has significantly moderated to below 4 percent in February (year-over-year), supported by a sound monetary framework. External imbalances have moderated, through continuing fiscal adjustment as well as strong export and remittances growth, but the external current account deficit remains relatively large and further adjustment is needed to reduce vulnerabilities. Policy performance remained in line with the program during the second half of 2011, with all quantitative performance criteria met at end-2011. The fiscal situation considerably strengthened, with the overall deficit being reduced significantly in 2011 from nearly 5 percent in 2010. The authorities have displayed commendable prudence regarding the amounts and terms of new debt, including by focusing on a possible private sector-led solution for the ailing chemical factory Nairit. The government is on track to achieve a substantial increase in tax collections in 2012 which would help create fiscal space to address the urgent needs of supporting private sector-led growth and reducing poverty. The government and Central Bank of Armenia also met or made substantial progress on all structural benchmarks under the program. Important technical steps regarding tax administration have been achieved, potentially laying the groundwork for a more modern, effective and business-friendly tax administration. There has also been progress in laying out tax policy strategies for the next few years, in further strengthening the inflation targeting framework, in consolidating financial stability and in bolstering the effectiveness of the provision of social services. Against the backdrop of weak external environment, the growth projection was reduced to 3.8 percent in 2012 with risks tilted to the downside. In light of expected absence of further pressures in international prices, inflation is expected to remain around the Central Bank's target. With continued fiscal consolidation over the medium-term, the authorities' welcome focus on export growth and other business environment improvements, strong remittances, and exchange rate flexibility, the current account deficit is expected to continue to decline".

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