YEREVAN, December 2, /ARKA/. The International Monetary Fund (IMF) Resident Representative to Armenia, Guillermo Tolosa said today that with a rebound in agriculture output, which has been hit hard by adverse weather conditions, the Armenian economy may grow 4% this year compared to 6.5% expansion in the first half of the year. Next year, the expansion is projected to be at a rate of 4.5%, he said.

According to him, this was the latest forecast, which in all likelihood, will be revised in view of the latest developments in the Armenian economy.

Tolosa said the global economy is projected to growth at a rate of 4.8% this year on the back of sound recovery, and is expected to drop to 4.2% in 2011. Speaking at a forum on global economic developments he said emerging economies, which include Armenia, are expected to grow at a rate of 7% this year and drop to 6.5% growth in 2011. The economies of developed countries are projected to expand by 2.2% this year and 3% in 2011. Guillermo Tolosa said a second wave of global economic crisis was little likely. The Armenian government projection for this year is 1.2%

After concluding its first review of Armenia’s economic performance under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) Arrangement on Wednesday, the IMF executive board approved an additional financial assistance of US$57.6 million to Armenia.

This brings the total disbursements to US$115.2 million. In June, IMF approved a three-year loan amounting to US$393.9 million under the ECF/EFF program. The contraction of agricultural output and a rise in imported wheat prices have translated into higher food prices, the board observed. This has pushed annual inflation over 9% in recent months.

However, as food price shocks recede, inflation is projected to decline to 7% by end of this year. The IMF noted that the government's fiscal policy strategy appropriately addressed the medium-term fiscal and debt vulnerabilities. Armenia's consolidation measures are aimed at bringing the budget deficit down to 3% of GDP this year from 8% of GDP last year. –0--