Key developments and challenges

The global crisis highlighted the vulnerability of Armenia’s dependence on remittances and commodities. A significant strengthening of the institutional environment and an improvement of the transport and communications infrastructure are needed to increase productivity and attract investments in export-oriented sectors.

Despite the government’s successful anti-crisis policies to stimulate lending to small and medium-sized enterprises (SMEs), the latter’s access to credit remains limited. It will be important to support prudential and regulatory measures aimed at increasing local currency lending, including steps to encourage the development of local capital markets.

The authorities need to strengthen the fiscal position after the crisis, while continuing to protect social and essential capital expenditures. An acceleration of tax and customs administration reforms is crucial for supporting this adjustment in a credible way. In addition, improvements in public debt management should focus on developing longer-term dram instruments.