IMF Executive Board assesses Armenia’s finance system as stable
YEREVAN, DECEMBER 14, ARMENPRESS. The Executive Board of the International Monetary Fund (IMF) assessed Armenia’s financial system as stable, but the compliance with the Basel Core Principles for Banking Supervision rated high – 97%, the Central Bank of Armenia (CBA) told Armenpress.
According to the IMF report, the stability of the financial system has been strengthened, and the flexibility has increased guaranteeing the maintenance of continuity of the financial system. Although the external risks typical to the region remain relevant, the results of the stress tests reveal that the flexibility of absorption of risks by Armenia’s banking system is maintained.
According to the assessment of the IMF Executive Board, Armenia’s banking system was capable of resisting the consequences of 2014 economic slowdown, which has been greatly contributed by a number of macroprudential measures taken by the Central Bank. The level of compliance of the Armenian banking sector’s regulation and supervision processes to the Basel Core Principles for Banking Supervision was rated high – 97%, whereas in 2012 this number was 93%, and in 2005 – 70%.
The IMF Executive Board welcomed the progress recorded in terms of the stability and development of the financial system. They welcomed the progress made by the authorities in strengthening financial sector oversight and promoting financial deepening to further enhance financial sector resilience. Directors commended the Central Bank of Armenia (CBA) for the reforms undertaken since the 2012 Financial Sector Assessment Program (FSAP) review, notably in adopting the prudential measures to mitigate risks from dollarization and upgrading the risk‑based supervision framework.
They called on the authorities to refine the risk‑based supervision framework for a more granular assessment of banks’ capital needs, enforce large exposure limits, and amend the definition of nonperforming and restructured loans in line with international best practices.
The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector.