Agence France Presse
March 3, 2009 Tuesday 12:31 PM GMT

The head of the International Monetary Fund said Tuesday that he
backed a 540-million-dollar (426-million-euro) loan to Armenia to
help the ex-Soviet republic deal with the global economic crisis.

The move came as Armenia's central bank announced that it would
cut back its efforts to prop up the country's currency, leading the
Armenian dram to lose around 16 percent against the dollar at exchange
points in Yerevan.

IMF Managing Director Dominique Strauss-Kahn Enhanced Coverage
LinkingDominique Strauss-Kahn -Search using: Biographies Plus News
News, Most Recent 60 Days said in a statement he would "recommend that
the IMF executive board approve a request for a 540-million-dollar,
28-month stand-by arrangement" to Armenia.

The board of the Washington-based body would discuss the proposal
later this week and following approval Armenia would be able to
draw 239 million dollars immediately, Strauss-Kahn Enhanced Coverage
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Recent 60 Days said.

Meanwhile the Armenian central bank issued a statement saying it
would cut back its efforts to support the country's currency.

"The council of the central bank, having considered the worsening of
trade conditions amid the world financial and economic crisis and the
drop in capital inflows, decided to limit central bank interventions
on the foreign currency market, thus returning to a free-float policy,"
it said.

Immediately after the announcement, the dram's value at exchange
points in Yerevan dropped from 305-308 drams to the dollar to a range
of 350 to 380, reflecting an average drop of around 16 percent.

Thousands of people have lost their jobs in the small Caucasus
Mountains country, including in its important mining sector, as a
result of the global crisis, according to local media.

Last week the World Bank said it would grant Armenia 85 million dollars
(67 million euros) to ease the effects of the financial crisis.