Republic of Armenia : Third Review Under the Extended Arrangement, and Request for Waiver and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Republic of Armenia

External conditions have remained difficult since the Second Review. Remittances have fallen and copper prices remain repressed. As a result, domestic demand has weakened further, with both private consumption and investment falling. The decline in imports has continued, and bank credit growth and inflation have turned negative. Nevertheless, real GDP growth has held up moderately, primarily due to export-related supply-side factors in agriculture and mining, although nominal GDP growth is lower than expected earlier. Owing to developments beyond the authorities' control, the fiscal deficit for 2015 was marginally higher than programmed. Monetary conditions have stabilized and pressures in the FX market have diminished. Banking sector profitability and loan performance have weakened but bank capitalization remains high due to efforts by banks to comply with the increase in minimum capital requirements. On the geopolitical front, there was a temporary but intense increase in regional tensions in April along the Line of Contact in the Nagorno-Karabakh conflict zone