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IMF Predicts Sharp Economic Contraction For Armenia

The Armenian currency, the dram, fell sharply against the dollar earlier this year.
YEREVAN -- The International Monetary Fund says Armenia's economy will contract by 5 percent this year and will not resume growing again until 2011, RFE/RL's Armenian Service reports.

Mark Lewis, head of an IMF mission visiting Yerevan, said on May 11 that the decline in the construction sector is a key factor for the downward revision.

Lewis praised the Armenian government and the Central Bank for their "sensible and sound approach to managing the crisis" and their exchange-rate policy.

The IMF announcement came right after authorities allowed a nearly 20 percent devaluation of the national currency, the dram.

Opposition politicians and some economists have strongly criticized the devaluation as a waste of the country's scarce external reserves.

But Ratna Sahay, an IMF deputy director for the Middle East and Central Asia, said "we think the authorities did the right thing in stabilizing the exchange rate."

Lewis agreed and stressed the importance of further structural reforms and improved tax administration to mitigate the impact of the global economic crisis on Armenia.