Government of Armenia
Supplementary Memorandum of Economic and Financial Policies
This memorandum complements the Memorandum of Economic and Financial Policies
of September 11, 2002. It reviews the implementation of the second annual
program supported by the Poverty Reduction and Growth Facility (PRGF)
and presents an update of the government's economic objectives and policies
for 2003. These objectives and policies are integral parts of the government's
strategy for poverty reduction as envisaged in the interim Poverty Reduction
Strategy Paper (PRSP).
I. Recent Developments and Performance Under the Program
1. The overall strong performance of the Armenian economy continued in
the second half of 2002. Real economic growth accelerated to 12.9 percent
in 2002 mainly because of higher grant-financed construction activity
and manufacturing production. At the same time, inflation remained subdued
with the 12-month rate at 2.0 percent. However, during the fourth quarter
of 2002, reserve money and broad money grew by 38 percent and 19 percent,
respectively. These increases were associated with an accelerated clearance
of domestic arrears in December, which could not be easily sterilized
given the limited instruments available to the central bank to control
liquidity. The external current account deficit narrowed further in 2002
to a preliminary 6.2 percent of GDP, primarily reflecting strong growth
in exports.
2. The fiscal deficit on a commitment basis declined from 3.8 percent
of GDP in 2001 to 0.6 percent in 2002 owing to lower-than-expected current
and capital expenditures (mainly attributed to over budgeting by project
implementation units) and revenue mobilization measures. On a cash basis,
the deficit declined from 4 percent of GDP to 2.4 percent. At the same
time, the stock of domestic expenditure arrears fell from 2.8 percent
of GDP at end-2001 to 0.7 percent at end-2002.
3. The performance of the energy sector improved in 2002 reflecting increased
use of hydropower, measures undertaken to enhance efficiency, and the
privatization of the electricity distribution company. In addition, the
largest thermal power plant and the management of the financial flows
of the nuclear power plant are also being privatized. The primary deficit
of the energy sector was 0.4 percent of GDP in 2002 compared with 2.5 percent
in 2001. Total collection as a share of the amount of electricity billed
increased to 90 percent in 2002 from 81 percent in 2001 while
technical and excess losses declined marginally to 25.9 percent from 26.5
percent in 2001. Such developments follow years of mismanagement that
have raised the indebtedness of the sector to unsustainable levels and
crippled its ability to deliver reliable and cost-effective power. At
end-2002, domestic and foreign banks had claims of nearly US$31 million
on state-owned energy sector companies.
4. In line with this positive performance, the program for the second
half of 2002 remained on track. All but one end-December quantitative
performance criteria were observed, including the targets on domestic
expenditure arrears, tax revenues, and net international reserves (NIR)
of the Central Bank of Armenia (CBA). NIR at program exchange rates rose
to US$231 million at end-December 2002 compared with a targeted floor
of US$165 million. The sharp increase in NIR in the last quarter
of the year can be attributed to a number of factors, including CBA purchases
of foreign exchange to stem deflationary pressures, lower-than-projected
government imports, and the disbursement of the floating tranche of the
fourth World Bank Structural Adjustment Credit. However, the ceiling on
external non-concessional debt was not observed as a government guarantee
was issued for a US$7.1 million medium-term external loan to the energy
sector. This loan will not jeopardize debt sustainability. We have also
instructed the Ministry of Energy and all the state-owned companies in
the sector that no such guarantees will be available in the future.
5. All structural performance criteria and all but one of the benchmarks
scheduled for implementation during the period October 2002-February 2003
have been observed. There was a slight technical delay in the approval
of guidelines for the resolution of problem banks (benchmark) scheduled
for end-February 2003. This measure will be implemented by mid-March and
will be a prior action for completing the third review. Key measures implemented
include the adoption of codes of conduct for tax and customs officials,
the establishment of a computerized valuation database at customs linked
to the Automated System for Customs Data (ASYCUDA), and the revocation
of licenses and appointment of liquidators for the five smallest banks
under interim central bank administration.
II. Macroeconomic Policies for 2003
6. In line with the medium-term economic strategy, the government's program
for 2003 aims at achieving the following core objectives:
- Provide the conditions for real economic growth of at least 7 percent
in order to reduce poverty and unemployment and further slow down emigration;
- Maintain the 12-month rate of inflation at no more than 3 percent
and gross international reserves above 4 months of imports; and
- Maintain fiscal discipline and further reduce public-debt ratios.
Fiscal policy
7. Budget for 2003. The fiscal deficit on a commitment basis
is projected at 2.5 percent of GDP. Tax revenues of the central government
are expected to increase to 15 percent of GDP based on improvements in
tax and customs administration. The government stands ready to undertake
additional tax measures in the event of a revenue shortfall, such as further
reducing value-added tax (VAT) exemptions at the border. Total expenditure
is budgeted to increase from 19.5 percent of GDP in 2002 to 22 percent
in 2003. The government is committed to clear remaining arrears by mid-2003
and to reduce expenditures below budgeted amounts by up to 0.7 percent
of GDP in the event of a shortfall in external financing.
8. VAT. In January 2003, the value of imported goods exempted
from VAT at the border was reduced from 25 percent to 20 percent of total
imports. Over the next two years, as the administrative capacity for VAT
credits and refunds further improve, the government is committed to eliminate
all VAT exemptions at the border other than for goods exempted under agreements
with international organizations or governments. Other measures taken
to improve the system for VAT refunds include the introduction of limits
on cash transactions. By mid-2003, the refund system will be further improved
by preparing quarterly reports on outstanding VAT amounts.
9. Tax administration. In late 2002, a code of conduct for tax
officials was adopted and an internal audit unit was established at the
State Tax Service. Beginning in 2003, this unit will prepare quarterly
audit reports to be shared with key officials and IMF and World Bank staff.
A website including basic tax legislation and regulations covering the
major taxes will be completed later in the year. The simplified tax has
been further streamlined and a universal turnover ceiling of AMD 50 million
was introduced in the 2003 budget. A minimum annual income tax of AMD
30,000 for businesses was also introduced to prompt small businesses to
move away from the "normal" tax regime where due to administrative
difficulties they used to pay little taxes to the simplified tax regime.
In early 2003, a draft law was submitted to parliament on the declaration
of income for all citizens. Lastly, the government intends to submit to
parliament this fall an amendment to the law on tax inspections aimed
at increasing transparency and simplifying the relationship between tax
auditors and taxpayers.
10. Customs administration. The computerized customs valuation
database will be updated with actual invoice values and we expect that
the share of imported goods whose import values equal their invoice values
will increase rapidly during the year. An updated version (1.16f) of ASYCUDA
will be introduced at all customs houses and customs points by end-May
2003, which will enhance the possibility of random checking of imported
goods and improve management reporting. In addition, all customs houses
will be networked with the ASYCUDA system by April while all custom points
will be networked via satellite by July 2003. A website has been
established with key information including customs tariffs and import/export
procedures. Mobile passport-reading machines were introduced last fall
to enforce the bi-annual limits on individual duty free exemptions. These
exemptions were reduced from US$500 to US$300 effective January 2003.
The internal audit unit at customs will begin preparing quarterly audit
reports based on criteria specified by IMF staff, which will be shared
with key officials and IMF and World Bank staff. In 2002, the customs
consultative committee was expanded to include further representatives
among businesses and international consultants in Armenia. This committee
will meet quarterly and publish their agenda and minutes for each meeting.
Lastly, by end-June 2003, a post-clearance program will be introduced
at customs headquarters.
11. Expenditure policy. The government remains committed to clearing
all arrears by mid-2003. Social expenditures (defined as expenditure on
health, education, and social security) are projected to increase to 5.7
percent of GDP in 2003 compared with 4.8 percent in 2002. In the event
of a financing shortfall, the government will not execute the contingent
expenditures detailed in the 2003 budget. However, priority expenditures,
including family allowances, will be protected. Capital expenditure will
increase rapidly mainly because of higher grant-financed public investment.
Lastly, a medium-term expenditure framework for 2004-06 will be finalized
in October 2003.
12. Expenditure management and budget reform. Further updating
of the budgeting reporting software is still needed for a fully functioning
system. At end-2002, the Ministry of Finance approved procedures for establishing
internal audits in the budgetary sector (comprising all line ministries).
By mid-2003, a manual consistent with international auditing standards
will be prepared. To further improving expenditure arrears control, the
government will submit amendments to the Budget System law that will make
it possible to reduce budgeted expenditures by up to 10 percent in the
case of a revenue shortfall without parliamentary approval. In such an
event, social expenditures will be safeguarded. A website including budget
laws, internal audit reports, and budget execution reports according to
both the economic and the functional distribution of expenditures will
be completed this spring. Later this year, the government intends to put
in place a financial and cash management procedure involving daily forecasts
for central government budget receipts and payments for the next twelve
months. Work will also continue on identifying and tracking external grants
with a view to include them in the budget.
Monetary and financial sector policies
13. Monetary policy. The overriding macroeconomic objective of
the CBA is to maintain inflation at no more than 3 percent a year. Given
the rapid increase in monetary aggregates toward the end of 2002 and the
associated inflationary risks, the CBA has engineered a reduction in the
money supply during the first quarter of 2003. The CBA will continue to
use all instruments at its disposal to contain any inflationary pressure.
Reserve money is projected to increase by 7 percent during the year while
the demand for broad money is projected to increase by 11 percent. The
multiplier is expected to increase reflecting both a projected decline
in the currency-to-deposits ratio and the reduction in reserve requirements
from 8 percent of deposits to 6 percent in mid-2003. The latter is
planned in connection with the introduction of the deposit insurance scheme.
14. Banking system. The CBA has taken steps to resolve the situation
of the eight banks under temporary administration. The liquidation of
five of those banks has been initiated and by mid-March, the CBA will
issue guidelines for the conduct of intervention of banks and for performing
"least-cost" diagnostic tests. The CBA will also announce its
decision to liquidate Credit Yerevan (a large intervened bank) during
2003. The CBA will share with the staffs of the IMF and the World Bank
monthly cash flow statements and balance sheets of Credit Yerevan, whose
liabilities are expected to decline rapidly until the bank is brought
to liquidation. By end-May 2003, the situation of the remaining two banks
will be resolved. In addition, the CBA will continue to strengthen banking
supervision, act decisively against banks that violate prudential norms,
and ensure that all market participants operate on a level playing field.
In this context, the CBA will--in consultation with external experts--review
the system of penalties imposed on banks that violate prudential standards.
Moreover, the CBA is preparing an onsite inspection manual to enhance
risk-based supervision. The central bank has also communicated to the
commercial banks that it will not tolerate any violations of exposure
limits (particularly from the energy sector) and that all regulations
will be fully enforced. The government will move cautiously with regard
to the introduction of the deposit insurance scheme that will begin collecting
premia in mid-2003. To ensure transparency, amendments will be made in
the central bank law to clarify the insurance event, accounts covered,
management of the insurance fund, and the structure of payments. The CBA
will publish the modalities of the scheme by end-April 2003, setting a
premium and a level of coverage comparable (in terms of GDP per capita)
to other transition economies. Any bank that might be placed under interim
administration before July 2005 would be excluded from the scheme.
15. Financial sector legislation. The financial legal framework
and the functioning of the judiciary need to be improved to foster financial
sector development. Despite continuing macroeconomic stability, interest
rates remain high and the financial sector remains small and fragile.
This is primarily attributed to the lack of proper mechanisms to ensure
creditor rights, leading to liquidity and solvency problems for banks
as they confront significant difficulties in recovering problem assets.
To address this situation, we will draft amendments to the law on Bank
Bankruptcy, the law on Banks and Banking, the law on Enforcement of Court
Decisions, the Civil Code, and the Civil Procedure Code. These changes
will enhance our ability to execute bank resolution strategies and more
effectively create, register, and enforce pledges.
External policies
16. Balance of payments. The current account deficit is projected
to deteriorate slightly in 2003. Capital transfers will continue to be
high owing to grants from a US-based private foundation. Gross international
reserves are projected to remain at around 4.3 months of imports of goods
and services. A remaining financing gap would be financed by IMF disbursements
and a structural adjustment loan from the World Bank.
17. Trade and foreign exchange regime. Armenia became a member
of the World Trade Organization in February 2003. Armenia is committed
to maintain a liberal trade regime with no restrictions in the making
of payments and transfers for current international transactions and in
conformity with Article VIII of the IMF's Articles of Agreement. The floating
exchange rate regime will be maintained.
18. External debt. The government will not accumulate external
nonconcessional debt or external payments arrears during the program period.
The debt-equity swap agreement with Russia is expected to be completed
in the next few months. The agreement, which entails the exchange of the
outstanding debt to Russia for equity positions in Armenian state-owned
enterprises, will significantly reduce Armenia's external debt ratios.
The government has cleared its outstanding arrears to Turkmenistan through
the provision of goods and intends to repay the remaining debt to that
country in the first half of 2003.
Structural policies
19. Energy sector. By mid-2003, the government will approve an
integrated financial rehabilitation plan for the energy, water, and irrigation
sectors for the period of 2003-07. The rehabilitation plan will include
a timetable for strengthening corporate governance in the energy sector
and for transferring the management function of the state-owned enterprises
through management contracts. In addition, independent boards of directors
will be established by September 2003 whose composition will be determined
by a Prime Ministerial decision. The government and other state institutions
shall not interfere in the activities of the energy companies. The boards
will approve independent management plans for the respective enterprises
and board members shall act independently from the government, parliament,
and special-interest groups. The board of directors for the transmission,
settlement, and dispatch centers will include representatives from the
electricity distribution and power generation companies. There will be
regular annual independent audits of all state-owned enterprises in the
energy sector carried out by reputable auditors, beginning with financial
year 2002. The auditor(s) will submit audited financial reports
to the boards and appropriate government bodies and the reports will be
published via mass media and the internet. In the meantime, the energy
regulatory commission will start implementing a power sector performance
monitoring and public dissemination system for intra-sectoral flows of
electricity and payments as specified in paragraph 18 of the attached
Technical Memorandum of Understanding (TMU). The financial
rehabilitation plan will contain a strategy for dealing with the debts
of the state-owned companies and will prevent them from increasing their
net bank liabilities. The central bank will continue to require commercial
banks to provision in full for any unsecured lending to the energy sector.
Furthermore, the government will not extend any further guarantees on
the sector's domestic or foreign loans. In April 2003, the government
will restructure the existing external debt guarantee to the nuclear power
plant (US$7 million). In 2003, the energy sector primary surplus excluding
the distribution company is expected to increase to 0.2 percent of GDP
from 0.1 percent in 2002.
20. Other key parastatals. The financial rehabilitation plan
will ensure further reduction of excess losses and elimination of payment
arrears by water and irrigation companies. The 2003 budget contains sufficient
subsidies to these and electric public transport companies to prevent
the accumulation of tax and energy payments' arrears. Through ongoing
technical improvements, including enhanced metering, the combined primary
deficit of the water and irrigation sectors is also projected to decline
to 0.6 percent of GDP in 2003 compared with a projected 0.8 percent in
2002.
21. PRSP. The government has prepared a draft PRSP that has been
circulated for comments to civil society and the international donor community.
The draft is currently being revised in light of comments received, focusing
on the prioritization and costing of the measures proposed. The final
document is expected to be approved by the government by mid-2003.
22. Governance. The government is aware of the need to fight
corruption and it has prepared an anti-corruption strategy in late 2002
based on an earlier consultant's report on the subject. The document will
be further revised to emphasize key anti-corruption measures and establish
an action plan for their implementation.
III. Program Monitoring
23. Program monitoring will be carried out based on semi-annual quantitative
performance criteria and quarterly quantitative benchmarks (Table
1) as well as structural performance criteria and benchmarks (Table
2). The fourth review under the PRGF-supported program, scheduled
for completion by end-September 2003, will be based on compliance with
end-June 2003 quantitative targets and the implementation of the envisaged
structural measures. The quantitative performance criteria include: ceilings
on the net domestic assets of the CBA, net domestic banking system credit
to the government, the overall cash deficit of the central government,
domestic expenditure arrears of the central government, State Fund for
Social Insurance arrears, contracting and guaranteeing of non-concessional
medium- and long-term external debt, and continuous performance criteria
on non-accumulation of external arrears of the government and on net disbursements
of short-term external debt. There are also floors on net official international
reserves of the central bank and tax revenues of the central government,
an indicative bound on reserve money, and an indicative floor on the primary
balance of the energy sector. The attached TMU details
definitions and monitoring (including adjusters) of quantitative performance
criteria.
24. Compilation and provision of information. The relevant ministries,
the CBA, and the National Statistics Service will share with the staff
all data as specified in the TMU. Following the adoption
of a new civil service law last year and as part of reforms in collaboration
with the World Bank toward further decentralization, in 2003 a large number
of budgetary institutions such as schools and universities, libraries,
and hospitals were converted into noncommercial enterprises that are controlled
and largely financed by the government. As a result, a large part of government
expenditure including wages, subsidies, and other transfers will be classified
in budget execution under "other goods and services". Since
these enterprises constitute instruments of government policy, their financial
risks largely correspond to government fiscal risks. While the current
reporting of budgetary units is line with Government Finance Statistics
methodology, the reporting by economic categories for these enterprises
is required for the analysis of their spending behavior, fiscal control,
and performance. Therefore, the government will request these entities
to begin submitting budget execution reports in line with the economic
classification of expenditures. The treasury will work (in consultation
with the IMF) towards ensuring that these reports are aggregated into
the regular budget execution reports in early 2004.
Table
1. Armenia: Quantitative Targets, December 2002-December 20031
(End of period stocks, unless otherwise specified)
|
| |
2002
|
2003
|
| |
December
Act. |
March
Prog.2 |
June
Prog.3 |
September
Prog.4 |
December
Prog.4 |
|
| Net domestic assets of the
CBA (ceiling)5 |
-12.4 |
-13.9 |
-18.5 |
-18.1 |
-16.7 |
|
| Net banking system credit
to government |
0.1 |
5.5 |
2.6 |
2.0 |
4.9 |
|
| Domestic arrears of the central
government |
9.1 |
8.0 |
0.0 |
0.0 |
0.0 |
|
| Stock of arrears of the State
Fund for Social Insurance |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
| Tax revenues of the central
government (floor)6 |
198.6 |
45.0 |
98.9 |
157.7 |
220.5 |
|
| Balance of the central government
on a cash basis6 |
-31.9 |
-9.0 |
-27.5 |
-39.8 |
-50.0 |
|
| Reserve money (band)4 |
111.3 |
(92.6-96.4) |
(93.3-97.1) |
(103.5-107.7) |
(116.8-121.6) |
|
| Primary balance of the energy
sector (floor)4,6 |
-5.1 |
-2.3 |
-1.2 |
2.5 |
2.7 |
|
| Contracting and guaranteeing
of new nonconcessional external debt with maturity of more than one year6
|
7.1 |
0 |
0 |
0 |
0 |
| Net disbursements of short-term
external debt6,7 |
0 |
0 |
0 |
0 |
0 |
|
| External arrears (continuous
criterion) |
0 |
0 |
0 |
0 |
0 |
|
| Net official international
reserves (floor)5 |
236 |
198 |
207 |
224 |
245 |
1 The definitions of the
line items and the adjusters on the fiscal balance and the stock of domestic
arrears are specified in the attached technical memorandum of understanding
(TMU).
2 Benchmark.
3 Performance criterion, unless otherwise indicated.
4 Indicative target.
5 At program exchange rates (as specified in the TMU).
6 Cumulative flow from the beginning of the calendar year until
the end of the month indicated.
7 Continuous criterion. Obligations with maturity of less than
one year, excluding normal import-related credit and sales of treasury bills
to nonresidents. |
|
Table 2. Armenia: Structural
Measures Under the Fourth Review
|
|
| |
Measures
|
Target Date1
|
|
| Performance Criteria |
|
|
| 1. |
Submit to parliament amendments to the Budget
System law with a view to improving expenditure control. |
April 2003 |
| 2. |
Introduce version 1.16f of the ASYCUDA system
at all customs houses and customs points. |
May 2003 |
|
| Benchmarks |
|
| 1. |
Begin work on a new budget reporting
system for noncommercial enterprises that will become operational in early
2004. |
May 2003
|
| 2. |
Complete least-cost diagnostic
analyses and formulate resolution strategies for Armcommunications bank
and Ardshin bank unless they are already liquidated or purchase and assume
resolution strategies have been put in effect. |
May 2003
|
| 3. |
Improve administration of VAT
refunds by simplifying procedures and preparing quarterly reports on outstanding
VAT amounts. |
June 2003
|
| 4. |
Establish fully operational internal
audit units at the State Tax Service and at the Customs Committee and prepare
quarterly audit reports, the results of which will be shared with the President's
office, the Prime Minister, the Ministry of Finance and Economy, and IMF
and World Bank staff. |
June 2003
|
| 5. |
Introduce a post-clearance verification
program at customs' headquarters. |
June 2003
|
| 6. |
Adopt financial rehabilitation
plan for energy, water, and irrigation sectors. The plan will set the process
for establishing independent boards of directors by September 2003 and performing
independent financial audits beginning with the 2002 financial year for
all state-owned companies in the energy sector, and will set a timetable
for transferring their management functions through management contracts. |
June 2003
|
| 7. |
Submit to cabinet draft amendments
to (i) the Civil Code (provisions on pledges) to more effectively create,
register, and enforce pledges; (ii) the law on Bank Bankruptcy (shareholder
rights) with a view to more effectively execute bank resolution strategies;
and (iii) the law on the Central Bank of Armenia to include provisions on
deposit insurance. |
July 2003 |
1End of period. |
Government of Armenia
Technical Memorandum of Understanding
This memorandum defines the benchmarks, performance criteria, adjustors, and reporting modalities referred to in the Memorandum of Economic and Financial Policies. I. Quantitative Targets
1. The program targets a minimum level of net official international
reserves (NIR) of the Central Bank of Armenia (CBA). The stock of
such reserves will be calculated as the difference between total official
gross international reserves and official reserve liabilities. Total gross
official international reserves are defined as the CBA's holdings of monetary
gold (excluding amounts pledged as collateral or in swaps), holdings of
SDRs, any reserve position in the IMF, and holdings of convertible currencies
in cash or in nonresident financial institutions (deposits, securities,
or other financial instruments). Gross reserves held in the form of securities
are marked to market. Gross reserves are reported net of the balance on
the government's Special Privatization Account (SPA) and excluding capital
subscriptions in foreign financial institutions and illiquid foreign assets.
There is no reporting on financial derivatives and other off balance sheet
positions, as the CBA does not currently trade in such instruments. If
the CBA decides to commence such trading it will promptly notify the IMF
staff in order to establish reporting requirements in this regard. Official
reserve liabilities shall be defined as outstanding liabilities to the
IMF and convertible currency liabilities of the CBA to nonresidents with
an original maturity of up to and including one year. NIR is monitored
in U.S. dollars, and, for program monitoring purposes, assets and liabilities
in currencies other than the U.S. dollar shall be converted into dollar-equivalent
values using the exchange rates as of December 31, 2002 (Attachment III,
Table 1).
2. The program targets a maximum level of net domestic assets (NDA) of the CBA. NDA is defined as reserve money less net foreign assets of the CBA. Net foreign assets are defined as NIR minus medium- and long-term liabilities of the CBA. To evaluate program targets, the dram-equivalent values of NIR and medium- and long-term liabilities are calculated at the end-2002 official exchange rate of dram 584.9 per U.S. dollar. 3. Reserve money targets are indicative and include a floor and a ceiling. They are subject to a daily bound of plus or minus 2 percent computed from the quarterly average standard deviation of excess reserves held by banks in percent of quarterly reserve money during the previous four years. Reserve money is defined as the sum of currency issue, required and excess reserves, and current and time deposit accounts of certain resident agents. 4. The stock of net credit of the banking system to the government is the sum of net credit from the CBA and net credit from commercial banks. The stock of credit from the CBA includes the CBA's holdings of treasury bills and treasury bonds less all types of government deposits. Treasury bonds are valued at the purchase price and treasury bills are valued at the purchase price plus the implicit accrued interest. The stock of net credit from commercial banks includes: (1) gross credit to the government less government deposits (including the counterpart funds of certain government onlending to the economy financed by the Lincy Foundation and the World Bank); and (2) banks' holdings of treasury bonds (valued at the purchase price and excluding accrued interest) and treasury bills (valued at the purchase price plus the implicit accrued interest).
5. External debt limits apply to all forms of new nonconcessional medium-
and long-term external debt1 with original maturities
of more than one year, which are contracted or guaranteed by the government
or the CBA. Excluded from the limits are changes in indebtedness resulting from
refinancing credits or rescheduling operations, sales of treasury bills or treasury
bonds to nonresidents (provided the sales go through the regular auction mechanism
and involve no exchange rate guarantees), and concessional loans.2
Except for normal import-related credits, there is a zero limit on net disbursements
of short-term external debt (obligations with original maturities of up to one
year) contracted or guaranteed by the government or the CBA. Transactions subject
to debt ceilings shall be valued in the contracted currencies and converted
into U.S. dollars at the average monthly market exchange rate in the month when
the commitment was contracted.
6. External arrears will consist of all overdue debt-service obligations (i.e., payments of principal and interest) arising in respect of loans contracted or guaranteed by the government or the CBA including unpaid penalties or interest charges associated with these arrears.
7. The central government budget balance on a cash basis is defined
from the financing side as the sum of domestic banking system net financing,
domestic nonbank net financing, and external net financing to the government.
Domestic banking system net financing equals the change during the period
of net credit to the government. Domestic nonbank net financing equals
the sum of: (1) the change during the period of outstanding treasury bills
and bonds to nonbanks (including accrued interest for treasury bills and excluding
accrued interest for treasury bonds);3 and (2) any
other disbursement or transaction that increases nonbanks' claims on the central
government plus net withdrawals from the SPA, less amortizations made by the
central government to private resident nonbank agents. External net financing
equals total debt-increasing disbursements from non-residents to the central
government less total amortizations from the central government to non-residents.
All foreign-currency denominated transactions are recorded in drams using the
prevailing exchange rate at the time of transaction. The central government
comprises all entities mentioned under the state budget including ministries
and noncommercial public enterprises.
8. The State Fund for Social Insurance (SFSI), whose overall cash balance cannot be less than zero on an annual basis, is monitored by a separate performance criterion on the stock of SFSI arrears. 9. The US-based Lincy Foundation extends grants to finance various investment projects. The project implementation units, which carry out Lincy-financed projects, maintain accounts at the CBA. These grants are recorded in the fiscal accounts as external grants on the revenue side and as foreign-financed capital expenditure on the expenditure side. 10. Proceeds from privatizations are deposited into the SPA. The account is held at the CBA and the proceeds are invested abroad together with the CBA's international reserves. However, these proceeds are not included in the definition of the monetary accounts of the banking system. Any withdrawal from the SPA will be accounted for as privatization proceeds used to finance the budget and will be recorded below the line. These withdrawals need to be replenished during the fiscal year and the corresponding negative financing amount will be recorded below the line. 11. Tax revenue is defined in accordance with Government Finance Statistics (GFS) 1986, section IV.A.1. Total revenues collected by the State Tax Service (STS) and the Customs Committee are classified as follows: VAT (of which: presumptive tax on cigarettes and petroleum), excises (of which: presumptive tax on cigarettes and petroleum), enterprise profit tax, personal income tax, land tax, customs duties (of which: presumptive tax on cigarettes and petroleum), other presumptive taxes, simplified tax, property tax, and other taxes (of which stamp duties and environmental taxes). 12. The program targets maximum levels for the stock of central government domestic arrears. For program purposes, domestic arrears are defined as follows. With respect to wages, contributions to the pension fund, family allowances, and amortization and domestic interest payments, the stock of arrears is defined as all unpaid claims outstanding at the end of the month. For all other expenditure categories, arrears are defined as the stock of unpaid claims, as verified by the recipient of the goods and services, that has been outstanding for more than 30 days as of the end of the month. 13. The government will provide a detailed quarterly cash flow for the energy sector. The energy sector is defined by the following state-owned companies: (1) Hrazdan thermal power plant; (2) Yerevan thermal power plant; (3) Metsamor nuclear power plant; (4) Sevan-Hrazdan Cascade hydropower plant; (5) Vorotan hydropower plants system; (6) High Voltage Electricity Network; (7) Armenergo; and (8) Armtourtrade. The program targets the primary balance of the energy sector, which is defined as current total revenues less total expenditures excluding interest payments and foreign-financed capital expenditures. II. Adjusters
14. The quantitative performance criteria and benchmarks under the program
are subject to the following adjuster on the cash balance of the government:
the cash balance of the central government will be adjusted downward (upward)
by the full amount of cumulative higher (lower) than programmed foreign-financed
project disbursements (excluding structural adjustment lending by the
World Bank). The programmed amounts are shown in Table
2 below.
15. The following adjuster on the net domestic assets of the CBA will apply to changes in the stock of medium- and long-term liabilities of the CBA: the target on the stock of net domestic assets of the CBA will be adjusted upward (downward) by the amount of any disbursement (repayment) from (to) KfW. The adjustment will be made at program exchange rates. III. Structural Targets 16. For the structural performance criterion on amending the Budget System law the following changes will be made: "The Government, within the scope of its authority provided in Article 23 shall organize commitment control and cash management of budgetary flows in order to ensure that shortfalls in receipts can be handled without increasing expenditure payment arrears. If at the time of budget execution there is a possibility of a shortfall of receipts for the year, and in order to avoid increases in expenditure payment arrears, the Government may and shall withhold up to 10 percent of the aggregate budget allocation for the year without having to obtain the approval of the National Assembly." 17. For the benchmark on the budget reporting of noncommercial enterprises, the government will institute a system under which these enterprises will report data in line with the GFS economic classification on revenues, expenditure and commitments (revenue from the budget, other capital revenue, other current revenue; wages, subsidies, pension transfers, other transfers, other goods and services, foreign-financed capital expenditures, domestic-financed capital expenditures). After introduction of the reporting system, these units will be required to submit quarterly reports on the execution of their budget no later than 30 days after the end of each quarter. These units will be subject to random internal audits. The Ministry of Finance and Economy will specify reporting and audit requirements in an appropriate regulation or by amending the Budget System law as needed. 18. The authorities will ensure that adequate regulation is in place to ensure transparency of physical flows of electricity; related payment flows in the sector; and payment flows including those from end users to the distribution company, to the various midstream power operations, and to the individual generators. The sector entities shall report on a (monthly) quarterly basis figures on:
- Power produced and sold by each power generation plant,
- Power exports and imports,
- Power received by the distribution company,
- Power supplied to end users (by major customer category),
- Technical losses, separately for the transmission and distribution systems,
- Amounts invoiced and amounts collected from customers (by customer category)
and from exports,
- Amounts invoiced by generating plant and for imports,
- Amounts paid to each generating plant and for imports,
- Amounts of fuel purchased and paid for by each thermal power plant,
- Amounts paid to others in the supply chain: transmission company, settlement,
dispatch, and contracting centers, and others.
The authorities will disseminate the performance data to the public on its website and to the World Bank and the IMF no later than 45 days after the end of each (month) quarter beginning with the data for the first quarter of 2003. IV. Data Reporting 19. The government of the Republic of Armenia will provide the IMF the following information as defined in Section II above.
20. Balance sheet of the CBA. The CBA has provided the IMF staff the
chart of accounts and it will notify the staff of any revisions thereto. Weekly
(summary4) and monthly end-of-period (by chart of
account) data on the balance sheet of the CBA will be reported within seven
days of the end of the reporting period.
21. Balance sheet of the banking system. Monthly banking system data, in the form of a monetary survey for the central bank and the consolidated balance sheet of the commercial banking system (by chart of accounts) will be reported electronically to the IMF within 21 days of the end of each month. The format for publication in the International Financial Statistics will be reported within 45 days of the end of each month. 22. Treasury bill and coupon bond financing The CBA will provide monthly data to the IMF within seven days of the end of each month by the following categories of holders: the CBA, resident banks, resident nonbanks, and nonresidents. 23. International reserves. The CBA will provide monthly data (by chart of accounts) within 14 days of the end of each month on both gross and net official international reserves. These data will be provided in two versions: (1) at program exchange rates; and (2) at actual official exchange rates.
24. Other financial data. The CBA will provide foreign exchange
market data (including the official, buying, and selling exchange rates,
inter-bank turnover, and the volume of CBA sales and purchases) and data
on interest rates of different maturities (including the refinance rate,
the inter-bank rate and volumes, the treasury bill and coupon bond yields
and volumes by maturity, and bank deposit and lending rates by maturity).
The CBA will also provide data on commercial bank soundness indicators
(including capital adequacy ratios, asset composition and quality, profitability,
liquid asset ratios, open foreign exchange positions, and percentage of
classified loans by category) (Table 3). In addition,
the CBA will provide data on bank compliance with prudential regulations
(Table 4). These data will be provided on a quarterly
basis within 30 days of the end of each quarter. Lastly, the CBA will
provide other data as specified in CBA Resolution No. 201 (December 6,
1999).
25. Non-tax and capital revenue. The Ministry of Finance and Economy (MFE) will report on monthly non-tax revenue, capital revenue, cash grants and proceeds from the sales of humanitarian assistance. This information will be reported within seven days of the end of each month. 26. External debt. The MFE, in collaboration with the CBA and the Ministry of Energy, will provide information on disbursements and outstanding stocks of short-term external debt; on contracting and guaranteeing and outstanding stocks of medium- and long-term external debt of the government, the CBA, and state-owned companies in the energy sector (by company); any stock of outstanding arrears on external debt service payments, and the total amount of outstanding government guarantees and external arrears within 21 days of the end of each month for preliminary data and within 45 days for final data.
27. Tax and expenditure arrears. The STS will report on an end-of-month
basis the following data on outstanding stock of tax arrears by the end
of the following month: (1) by type of tax (monthly), (2) for the 10 largest
debtors (quarterly), and (3) for all major companies in the energy, water,
and irrigation sectors (quarterly). The reports on expenditure arrears
(Table 5) will be compiled monthly by the MFE for
the central government and the SFSI separately, and reported within 45
days of the end of each month for government arrears and within 10 days
for SFSI arrears.
28. Central government employment. The National Statistics Service (NSS) will provide quarterly updates on employment by ministries and average wages within one month following the end of each quarter. 29. Budget Execution. The MFE will report to the IMF total revenue collected separately by the SFSI, the STS, and the Customs Committee on a monthly basis within seven days of the end of each month. Monthly data on budget execution will be reported by the MFE and the SFSI within one month following the end of each quarter. All cash receipts, cash expenditures (including debt-service payments), and external and domestic borrowing operations will be part of this report. Expenditure data will be provided according to both economic and functional classifications, consistent with GFS methodology. 30. Balance of payments. The NSS will provide: (1) on a monthly basis detailed export and import data within 28 days of the end of each month; and (2) on a quarterly basis a balance of payments within 45 days of the end of each quarter.
31. Energy sector. The Ministry of Energy will provide monthly reports
on the end-of-month stock of accounts payables and accounts receivables
for the consolidated energy sector (defined in Section I above) with a
lag of no more than 28 days. It will also provide the cash flow information
with a lag of 45 days (Table 6).5
32. Privatization proceeds. In consultation with the CBA, the MFE will provide the IMF with information on: (1) the balance on the SPA at the end of each month; and (2) all gross additions and gross withdrawals specifying the purpose of each transaction during that month. The information will be provided on a monthly basis no later than seven days after the end of each month. 33. Prices and GDP. The NSS will provide the monthly CPI by category by the fifth day of the following month, and the monthly GDP estimates within one month of the end of the period. The CBA will also submit the monthly index of core inflation within 21 days after the end of each month.
Table
1. Armenia: Program Exchange Rates of the CBA
(As of December 31, 2002)
|
| Country |
Drams
Per
Currency |
Dollars
Per
Currency |
|
| Austrian dollar |
329.94 |
0.5641 |
| Canadian dollar |
372.92 |
0.6376 |
| Swiss franc |
416.61 |
0.7123 |
| Danish krone |
73.78 |
0.1261 |
| Euro |
606.88 |
1.0376 |
| Pound sterling |
935.94 |
1.6002 |
| Japanese yen |
4.87 |
0.0083 |
| Norwegian krone |
83.07 |
0.1420 |
| Swedish krona |
66.29 |
0.1133 |
| U.S. dollar |
584.89 |
1.0000 |
| SDR |
792.28 |
1.3546 |
| Gold 1 |
6568.46 |
11.2302 |
1Per gram. |
Table 2. Armenia:
Cumulative Foreign-Financed Project Disbursements1
(In billions of drams)
|
| March 2003 |
June 2003 |
|
| 8.7 |
19.8 |
1On calendar year basis. |
Table
3. Armenia: Financial Soundness Indicators for the Banking Sector, 2000–03
(In percent, unless otherwise indicated)
|
| |
Dec-00 |
Dec-01 |
Jun-021 |
Sep-022 |
Dec-022 |
Mar-03 |
Jun-03 |
|
| Capital adequacy |
|
|
|
|
|
|
|
| |
|
Total regulatory capital to
risk-weighted assets |
25.0 |
13.6 |
27.3 |
31.1 |
30.5 |
|
|
| |
|
Tier I regulatory capital to
risk-weighted assets |
23.3 |
12.3 |
26.1 |
29.7 |
28.8 |
|
|
| |
|
Capital (net worth) to assets |
14.2 |
8.8 |
17.3 |
17.8 |
17.6 |
|
|
|
| Asset composition |
|
|
|
|
|
|
|
| |
Sectoral distribution of loans
(billions of drams)3 |
|
|
|
|
|
|
|
| |
|
Industry (excluding energy
sector) |
20.8 |
24.2 |
25.2 |
14.2 |
16.3 |
|
|
| |
|
Energy Sector |
16.3 |
8.6 |
8.2 |
15.5 |
12.2 |
|
|
| |
|
Agriculture |
10.4 |
9.9 |
7.7 |
3.1 |
7.2 |
|
|
| |
|
Construction |
2.0 |
2.4 |
3.0 |
1.9 |
2.5 |
|
|
| |
|
Transport and communication |
2.1 |
1.9 |
1.8 |
0.8 |
0.8 |
|
|
| |
|
Trade/commerce |
12.7 |
13.4 |
13.9 |
12.7 |
13.9 |
|
|
| |
Sectoral distribution of loans
to total loans (percent of total) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
|
|
| |
|
Industry (excluding energy
sector) |
17.1 |
23.0 |
31.2 |
20.5 |
23.7 |
|
|
| |
|
Energy Sector |
13.3 |
8.1 |
10.1 |
22.3 |
13.9 |
|
|
| |
|
Agriculture |
8.5 |
9.4 |
9.6 |
4.4 |
9.0 |
|
|
| |
|
Construction |
1.6 |
2.3 |
3.7 |
2.7 |
3.7 |
|
|
| |
|
Transport and communication |
1.7 |
1.8 |
2.2 |
1.1 |
1.0 |
|
|
| |
|
Trade/commerce |
10.5 |
12.7 |
17.2 |
18.3 |
20.6 |
|
|
| Foreign exchange loans to total loans |
85.9 |
84.7 |
84.1 |
81.9 |
82.5 |
|
|
|
| Asset quality4 |
|
|
|
|
|
|
|
| |
Non-performing loans to gross
loans |
20.5 |
16.7 |
11.8 |
6.4 |
4.9 |
|
|
| |
Provisions to non-performing
loans |
14.0 |
16.2 |
29.8 |
43.6 |
40.2 |
|
|
| |
Spread between highest and
lowest interbank rates |
27.7 |
21.0 |
N/A |
13.4 |
14.0 |
|
|
|
| Earnings and profitability |
|
|
|
|
|
|
|
| |
ROA (profits to period average
assets) |
-0.9 |
-10.3 |
-1.3 |
0.6 |
7.6 |
|
|
| |
ROE (profits to period average
equity) |
-6.0 |
-127.9 |
-7.4 |
3.2 |
5.5 |
|
|
| |
Interest margin to gross income |
24.7 |
21.6 |
23.3 |
26.7 |
27.4 |
|
|
| |
Noninterest expenses to gross
income |
29.4 |
33.1 |
32.3 |
34.5 |
35.2 |
|
|
|
| Liquidity |
|
|
|
|
|
|
|
| |
Liquid assets to total assets |
30.5 |
33.1 |
40.2 |
47.5 |
44.5 |
|
|
| |
Liquid assets to total short-term
liabilities |
86.1 |
80.4 |
105.5 |
118.6 |
108.8 |
|
|
| |
Customer deposits to total
(non-interbank) loans |
156.0 |
216.1 |
198.4 |
196.4 |
218.6 |
|
|
| |
Foreign exchange liabilities to total liabilities |
80.6 |
79.7 |
78.1 |
61.1 |
74.6 |
|
|
|
| Sensitivity to market risk
|
|
|
|
|
|
|
|
| |
Gross open positions in foreign
exchange to capital |
22.5 |
97.8 |
21.9 |
24.4 |
15.3 |
|
|
Source: Central Bank of Armenia
1Includes the data of
21 banks and excludes the data of 7 banks under interim administration.
2Includes the data of 20 banks and excludes the data of 8 banks
under interim administration.
3Includes only loans to residents.
4Detailed data on classified loans are currently being prepared
by the CBA. |
Table
4. Armenia: Bank Compliance with Prudential Norms, 2001-031
(Number of Banks)2
|
| |
|
|
Dec-01 |
Mar-02 |
Jun-02 |
Sep-02 |
Dec-02 |
Mar-03 |
Jun-03 |
|
| Capital adequacy (CAR) |
|
|
|
|
|
|
|
| |
Capital/risk-weighted assets |
|
|
|
|
|
|
|
| |
|
CAR < 12 % |
9 |
1 |
1 |
1 |
0 |
|
|
| |
|
12% < CAR < 15% |
0 |
3 |
2 |
1 |
2 |
|
|
| |
|
15% < CAR < 20% |
2 |
1 |
1 |
2 |
3 |
|
|
| |
|
20% < CAR < 30% |
6 |
4 |
5 |
5 |
3 |
|
|
| |
|
CAR > 30% |
13 |
11 |
11 |
11 |
12 |
|
|
| |
Core capital/risk-weighted assets |
|
|
|
|
|
|
|
| |
|
CAR < 8 % |
9 |
1 |
1 |
0 |
0 |
|
|
| |
|
8% < CAR < 13% |
0 |
2 |
2 |
2 |
3 |
|
|
| |
|
13% < CAR < 20% |
3 |
3 |
1 |
2 |
2 |
|
|
| |
|
20% < CAR < 30% |
5 |
4 |
5 |
6 |
3 |
|
|
| |
|
CAR > 30% |
13 |
10 |
11 |
10 |
12 |
|
|
|
| Liquidity (LR) |
|
|
|
|
|
|
|
| |
Liquid assets/demand liabilities |
|
|
|
|
|
|
|
| |
|
LR < 80% |
11 |
2 |
1 |
1 |
1 |
|
|
| |
|
80% < LR < 100% |
3 |
4 |
2 |
4 |
5 |
|
|
| |
|
100% < LR < 150% |
5 |
5 |
7 |
4 |
7 |
|
|
| |
|
150% < LR < 200% |
3 |
1 |
3 |
4 |
3 |
|
|
| |
|
LR > 200% |
8 |
8 |
7 |
7 |
4 |
|
|
| |
Liquid assets/total assets 3 |
|
|
|
|
|
|
|
| |
|
LR < 25% |
12 |
4 |
4 |
2 |
5 |
|
|
| |
|
25% < LR < 30% |
3 |
1 |
2 |
5 |
2 |
|
|
| |
|
30% < LR < 40% |
7 |
7 |
7 |
3 |
7 |
|
|
| |
|
40% < LR < 50% |
1 |
1 |
1 |
4 |
2 |
|
|
| |
|
LR > 50% |
7 |
7 |
6 |
6 |
4 |
|
|
|
| Exposure limits 4 |
|
|
|
|
|
|
|
| |
Single external borrower/capital |
|
|
|
|
|
|
|
| |
|
Exposure > 20% |
4 |
3 |
3 |
5 |
4 |
|
|
| |
Single internal borrower/capital |
|
|
|
|
|
|
|
| |
|
Exposure > 5 |
1 |
0 |
1 |
1 |
0 |
|
|
| |
Total internal borrower/capital |
|
|
|
|
|
|
|
| |
|
Exposure > 60 |
1 |
0 |
0 |
0 |
0 |
|
|
|
| Net open foreign exchange position |
|
|
|
|
|
|
|
| |
Total currencies position/capital |
|
|
|
|
|
|
|
| |
|
Exposure > 25% |
1 |
0 |
0 |
0 |
1 |
|
|
| |
Nonconvertible currencies position/capital |
|
|
|
|
|
|
|
| |
|
Exposure > 5% |
|
|
|
|
|
|
|
| |
|
|
2 |
1 |
1 |
1 |
1 |
|
|
|
| Asset quality |
|
|
|
|
|
|
|
| |
Nonperforming loans/gross loans (NPL) |
|
|
|
|
|
|
|
| |
|
NPL < 2% |
12 |
6 |
5 |
5 |
6 |
|
|
| |
|
2% < NPL < 4% |
5 |
1 |
2 |
3 |
2 |
|
|
| |
|
4% < NPL < 6% |
2 |
2 |
3 |
2 |
5 |
|
|
| |
|
6% < NPL < 10% |
2 |
3 |
2 |
4 |
2 |
|
|
| |
|
NPL > 10% |
9 |
10 |
10 |
8 |
7 |
|
|
Source: Central Bank of Armenia.
1Lower bounds (capital adequacy and liquidity) and upper bounds
(exposure limits and open foreign exchange positions) reflect Armenian
standards.
2Prudential ratios are calculated on the basis of 30 banks
at the end of 2001 and 20 banks in 2002. The ratio on exposure limits
is calculated based on 25 banks at end-2001 and 20 banks in 2002. Asset
quality is calculated based on 30 banks at end-2001.
3Due to methodological differences, not all cases of a liquidity
ratio below 25 percent constitute a violation of the prudential norm.
4 Some violations occurred after the CBA required a capital
write-off. |
Table
5. Armenia: Arrears of State Budget and SFSI
(In billions of drams; end of period)
|
| |
|
2001
|
2002
|
20032
|
| 2000 |
March |
June |
September |
December |
March |
June |
September |
December |
March |
June |
|
| Total arrears |
44.3 |
46.3 |
38.5 |
39.1 |
42.2 |
41.4 |
45.2 |
35.2 |
19.8 |
|
|
|
| Total expenditure arrears |
37.3 |
37.5 |
36.1 |
34.9 |
35.8 |
32.5 |
34.0 |
24.0 |
9.1 |
|
|
| |
Current expenditures |
34.6 |
35.2 |
33.3 |
32.5 |
31.4 |
29.0 |
30.6 |
21.7 |
7.4 |
|
|
| |
|
Wages |
0.5 |
0.4 |
0.4 |
0.4 |
0.4 |
0.4 |
0.4 |
0.3 |
0.3 |
|
|
| |
|
Subsidies 1 |
0.9 |
0.9 |
0.8 |
0.8 |
0.8 |
0.9 |
0.8 |
0.7 |
0.7 |
|
|
| |
|
Interest |
3.4 |
4.2 |
1.9 |
2.5 |
3.1 |
3.7 |
4.3 |
1.2 |
0.0 |
|
|
| |
|
|
Domestic interest |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
| |
|
|
External Interest |
3.4 |
4.2 |
1.9 |
2.5 |
3.1 |
3.7 |
4.3 |
1.2 |
0.0 |
|
|
| |
|
Transfers |
9.0 |
9.0 |
8.8 |
8.8 |
7.9 |
6.8 |
6.7 |
5.4 |
0.4 |
|
|
| |
|
|
Family Allowances |
4.1 |
4.1 |
4.1 |
4.1 |
3.1 |
2.9 |
2.8 |
2.8 |
0.3 |
|
|
| |
|
|
Pension Contributions |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
0.0 |
|
|
| |
|
|
Contribution to pension fund |
0.6 |
0.6 |
0.4 |
0.4 |
0.4 |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
| |
|
|
Other 1 |
3.3 |
3.2 |
3.2 |
3.2 |
3.3 |
2.8 |
2.8 |
1.5 |
0.0 |
|
|
| |
|
Goods and Services 1 3 |
20.8 |
20.8 |
21.5 |
20.1 |
19.2 |
17.3 |
18.5 |
14.0 |
6.0 |
|
|
| |
|
|
Health |
12.7 |
12.7 |
12.4 |
11.7 |
11.5 |
11.5 |
11.5 |
11.3 |
4.8 |
|
|
| |
|
|
Education |
1.7 |
1.6 |
1.8 |
1.8 |
2.2 |
2.2 |
2.3 |
2.1 |
0.9 |
|
|
| |
|
|
Other |
6.4 |
6.5 |
7.3 |
6.5 |
5.5 |
3.6 |
4.7 |
0.7 |
0.3 |
|
|
|
| |
Capital Expenditures 1 |
2.7 |
2.3 |
2.8 |
2.4 |
4.4 |
3.5 |
3.4 |
2.3 |
1.7 |
|
|
| |
Net lending 1 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
|
| External Amortization arrears |
7.0 |
8.8 |
2.4 |
4.2 |
6.4 |
8.9 |
11.2 |
11.2 |
10.7 |
|
|
|
| Memorandum items: |
|
|
|
|
|
|
|
|
|
|
|
| |
Domestic expenditure arrears |
33.9 |
33.4 |
34.2 |
32.5 |
32.7 |
28.8 |
29.8 |
22.8 |
9.1 |
|
|
| |
|
of which: social expenditures arrears
3 |
21.7 |
21.6 |
21.6 |
20.9 |
20.0 |
19.4 |
19.5 |
17.7 |
6.0 |
|
|
| |
External payment arrears |
10.4 |
12.9 |
4.3 |
6.6 |
9.5 |
12.7 |
15.5 |
12.4 |
10.7 |
|
|
| |
SFSI stock of arrears |
4.4 |
3.3 |
3.0 |
3.6 |
1.4 |
-0.2 |
0.0 |
0.0 |
0.0 |
|
|
Source: Ministry of Finance and Economy.
1Arrears outstanding for more than 30 days.
2As specified in the TMU, the Authorities will compile the
data for the quarter ending in March 2003 and June 2003 within 45 days
after the end of each quarter.
3The December 2002 composition of arrears under Goods and Services
is preliminary. |
Table
6. Armenia: Cash Flow of the Consolidated Energy Sector1
(In billions of drams)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
2000
|
2001
|
2002
|
20032
|
| |
|
|
|
|
|
Q1 |
Q2 |
Q3 |
Q4 |
Year |
Year w/o Armelnet |
Q1 |
Q2 |
Year |
|
| Revenues |
79.9 |
65.1 |
20.2 |
15.1 |
12.8 |
22.6 |
70.7 |
64.0 |
17.8 |
11.2 |
55.4 |
| |
Electricity revenues collected |
75.3 |
62.8 |
19.6 |
15.0 |
12.1 |
22.2 |
68.9 |
62.1 |
17.1 |
10.8 |
53.0 |
| |
Revenues collected for Thermal Energy Supply |
3.6 |
1.0 |
0.3 |
0.1 |
0.6 |
0.0 |
1.0 |
1.0 |
0.6 |
0.1 |
1.4 |
| |
Non-Core Activities |
1.0 |
1.3 |
0.3 |
0.1 |
0.1 |
0.4 |
0.9 |
0.9 |
0.2 |
0.3 |
1.0 |
| |
| Expenditures |
101.3 |
105.7 |
24.1 |
16.0 |
17.6 |
36.3 |
93.9 |
77.2 |
24.4 |
14.6 |
69.3 |
| |
Inputs |
40.1 |
47.3 |
10.4 |
3.8 |
3.3 |
12.6 |
30.0 |
30.1 |
14.2 |
4.6 |
30.1 |
| |
|
Imported Gas |
38.4 |
39.0 |
8.0 |
2.1 |
1.3 |
12.4 |
23.7 |
23.8 |
12.4 |
3.5 |
24.0 |
| |
|
Nuclear Fuel |
1.7 |
8.3 |
2.4 |
1.7 |
2.0 |
0.2 |
6.3 |
6.3 |
1.8 |
1.1 |
6.2 |
| |
O&M Costs |
34.3 |
31.1 |
7.2 |
5.8 |
5.0 |
6.0 |
24.0 |
13.0 |
3.2 |
3.1 |
13.0 |
| |
Net Payment of Taxes Accrued |
17.2 |
14.8 |
4.2 |
4.7 |
3.9 |
8.9 |
21.6 |
18.9 |
2.5 |
2.0 |
8.6 |
| |
Other Current Expenditures |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| |
Interest Payments |
5.0 |
4.7 |
0.8 |
1.0 |
4.3 |
3.2 |
9.2 |
8.2 |
1.0 |
1.4 |
3.8 |
| |
Capital Expenditures |
4.8 |
7.8 |
1.6 |
0.7 |
1.1 |
5.7 |
9.0 |
7.1 |
3.5 |
3.5 |
13.8 |
|
| Primary Balance 3 |
-13.5 |
-29.7 |
-1.7 |
0.8 |
0.6 |
-4.9 |
-5.1 |
1.7 |
-2.3 |
1.2 |
2.7 |
| Current Balance |
-11.6 |
-28.0 |
-1.6 |
0.8 |
0.7 |
-4.9 |
-4.9 |
2.0 |
-2.0 |
1.4 |
3.7 |
| Balance |
-21.5 |
-40.6 |
-3.9 |
-0.9 |
-4.7 |
-13.7 |
-23.2 |
-13.3 |
-6.6 |
-3.4 |
-13.9 |
|
| Financing available |
21.5 |
40.6 |
3.3 |
1.4 |
4.8 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
Domestic Sources |
2.6 |
19.6 |
1.8 |
0.5 |
0.9 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Banks |
-2.3 |
-4.7 |
0.1 |
-2.1 |
-0.8 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Budgetary loans |
-0.6 |
3.2 |
5.0 |
0.1 |
-7.0 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Nonbank loans |
-9.2 |
15.6 |
-6.7 |
-0.9 |
4.9 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Tax Arrears |
7.1 |
-0.1 |
0.7 |
3.0 |
0.1 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Production Reserves |
4.2 |
5.1 |
2.3 |
2.2 |
1.6 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Pre-payment for electricity |
-0.5 |
-0.3 |
0.4 |
-1.8 |
2.3 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
|
Collection of old arrears |
3.8 |
0.9 |
0.1 |
0.0 |
0.0 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
External Sources |
-0.3 |
1.3 |
1.4 |
-1.0 |
1.0 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
Gov. Subsidies on external loans |
4.9 |
7.2 |
0.0 |
2.0 |
2.9 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
| |
ArmRosGasProm Gas, debt for equity swap |
14.3 |
12.6 |
0.0 |
0.0 |
0.0 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
|
| Errors and Omissions |
0.0 |
-0.0 |
0.0 |
0.0 |
0.0 |
. . . |
. . . |
. . . |
. . . |
. . . |
. . . |
Sources: Armenian authorities; and Fund staff estimates.
1 Starting 2003, the cash flows do not include the activities
of the electricity distribution company ArmElnet, which was privatised
at end-2002.
2 As specified in the TMU, the authorities will compile quarterly
data for 2003 within 45 days after the end of each quarter. The figures
displayed in the table are projections.
3 The primary balance is defined as current revenues minnus
total expenditures excluding interest payments and foreign-financed capital
expenditures. |
1The term "debt"
shall have the meaning set forth in Section 9(a) of the Guidelines on performance
criteria on external debt, as modified by the Executive Board Decision No. 12274-(00/85)
of August 24, 2000, and shall include all current (noncontingent) liabilities,
which are created under a contractual arrangement through the provision of economic
value in the form of financial or nonfinancial assets (including currency) or
services, and/or income, and which require the debtor to make one or more payments
in the form of such assets (including currency) or services at some future point(s)
in time to discharge the principal and/or interest liabilities incurred under
the contract. In particular, all instruments that share the characteristics of
debt enumerated above (including loans, suppliers' credits, and leases) will be
included in the performance criterion on external debt.
2 For program purposes, a loan is considered concessional
if the grant element is at least 35 percent calculated using a discount factor
based on the Commercial Interest Reference Rates (CIRRs) published by the OECD
plus margins depending on the loan maturity. The margins are: 0.75 percent
for repayment periods of less than 15 years, 1 percent for 15-19 years, 1.15 percent
for 20-29 years, and 1.25 percent for 30 years or more. The average of the CIRRs
over the last ten years will be used for loans with a maturity of at least 15
years and the average of the CIRRs for the preceding six months will be used for
shorter maturities.
3Domestic nonbank holdings of treasury bills and treasury
bonds are defined as total outstanding treasury bills and bonds less holdings
by the banking system and the SFSI.
4As defined in CBA Resolution No. 201 (December 6,
1999).
5The table is in summary form. A more comprehensive
table has been agreed in the form of an Excel workbook.
|
