Download Monetary policy during the crisis

Macroeconomic Environment
and Policies After Crisis In
Armenia
Ministry of Finance
Deputy Minister Vardan Aramyan
October 6, 2011
Content
 Recent Macro Developments
 Macro Policies Responses to Shocks
 Fiscal Policy Response
 Monetary Policy Response
 Challenges Ahead
 Government Future Policy Dimensions
Main macro indicators of Armenia
economy
Behavior of Real GDP and Inflation
20
Supply shock
15
10
5
-15
Real GDP - index
Inflation (y/y)
20
12
20
11
.¶
20
10
20
09
20
08
20
07
20
06
20
05
20
04
-10
20
03
20
01
-5
20
02
0
GDP Branches Real Growth Rates
50
40
30
20
10
0
-10
2005
2006
2007
2008
2009
2010
2011
2012
-20
-30
-40
-50
Industry
Agriculture
Construction
Services
Net Indirect taxes
GDP
External Sector:
Export and Import growth rates (by BOP Data)
%
55
45
35
25
15
5
-5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(p)
(f)
-15
-25
-35
Export
CAB/GDP, %
Import
Monetary Sector:
Credit and Deposits growth
D ynamics of Credits and D epos its
20
07
2 0 .1
07
2 0 .4
0
2 0 7.7
07
.1
20 0
08
2 0 .1
08
2 0 .4
0
2 0 8.7
08
.1
20 0
09
2 0 .1
09
2 0 .4
0
2 0 9.7
09
.1
20 0
10
2 0 .1
10
2 0 .4
10
2 0 .7
10
2 0 .1
11
2 0 .1
11
2 0 .4
11
.7
470
420
370
320
270
220
170
120
70
Deposits in AMD (index 2007=100)
Deposits in FeX (index 2007=100) Dollarization
Credits to economy (index 2007=100)
Macro Policies And Their
Responses to Shocks
Fiscal Policy Effects On Economy:
Fiscal Policy Impulse Responses 2006-2012
12
10
8
6
4
2
0
-2
-4
expansionary: for
economic
recovery
tightening: to mitigate
inflation pressures
2006
2007
Revenue Impulse
2008
2009
2010
Expenditure Impulse
2011est.
2012est.
Fiscal Impulse
Monetary policy response to shocks
Dynamics of monetary conditions index
10
200
8
150
6
100
4
2
Response to
economic crisis
Response to
inflation
0
20
06
/3
20
07
/1
20
07
/3
20
08
/1
20
08
/3
20
09
/1
20
09
/3
20
10
/1
20
10
/3
20
11
/1
20
06
/1
0
50
Repo rate (left axis)
Monetary conditions index ( increase-tough)
Fiscal Consolidation and Current
Account Adjustment
16
14
12
10
8
6
4
2
0
2000
2002
2004
CAB/GDP, %
2006
2008
2010
State budget deficit
2012
Public Debt
%
50
40
30
20
10
Exter nal Debt/GDP
12
(
20
20
Domestic Debt/GDP
f)
f)
11
(
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
20
00
0
Government External Debt
(including and excluding subloans)
%
40
30
20
10
Gover nment Exter nal Debt/GDP
Gover nment Exter nal Debt/GDP (excluding subloans)
20
20
18
20
16
20
14
20
12
20
10
20
08
20
06
20
04
20
02
20
20
00
0
External Debt Sustainability
Indicators
Debt service-to-exports+remittances ratio
PV of de bt-to-GDP+re mittance s ratio
25
50
45
40
20
35
30
15
25
20
10
15
10
5
5
0
2011
2016
2021
baseline
nominal depreciation)
historical
0
2011
2016
most extreme (30%
threshold
2021
Fiscal sustainability indicators
Public sector debt burden and liquidity indicators under
baseline and alternative scenarios
PV debt-to-GDP
Debt service-to-revenue
30,0
80,0
25,0
60,0
20,0
15,0
40,0
10,0
20,0
5,0
0,0
0,0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Baseline
Most extreme (Permanently lower GDP growth)
Fix primary balance
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Baseline
Most extreme (Permanently lower GDP growth)
Fix primary balance
The Risks Of Global Economy for Armenia
 European 5 countries Fiscal Debt and a Need for
Fiscal Consolidation – where is the balance between
speed of fiscal adjustment and not impeding
economic recovery.
 US and Japan’s over expansionary fiscal stances,
debt and need of adjustment-remedies in a short
run v.s. need for surgery in the long run
 European Banking Sector problems due to the
Greek and Italians bonds, collapse in euro zone
trading activity and ever steeper funding costs banks capitalization v.s. Sovereign bail-outs
 Greece default probability increase- spillover effect
over the World markets..
Future Policy Dimensions
1. Continuing to perform well coordinated and Counter
Cyclical Monetary and Fiscal Policies, aimed at ensuring
Macro stability as a main basis for sustainable economic
growth
2. Targeting to diversify economic structure is of high priority
in government Policy agenda-increasing the resilience of
Economy to negative external shocks
3. Continuing implementing policies of supporting productive
and export oriented industries- targeting long term
competitiveness
4. Pushing multi pillar Pension Reform, and in the long term
avoiding of PAYG system overburdening risk over
Government Finance.
5. Improving Business environment
Government of RA
5/23/2017
16
THANK YOU
Government of RA
5/23/2017
17