Economist: Armenian Government wants to get additional aggregates to overcome 60% upper state debt threshold

By separating the Central Bank's debts from the state debt, the Armenian Government most likely wants to receive additional aggregates to overcome the 60% upper threshold of the state debt in the GDP, Bagrat Asatryan, former chairman of the Central Bank of Armenia (CBA), said at today's press conference when replying to ArmInfo's question.    

Asatryan said that the Armenian legislature clearly regulates the state debt-related issues. The country is intensively approaching the 60% upper threshold of the state debt and the need has arisen to overcome that threshold. If it is really so, then the Government is doing "eyewashing", Asatryan said. He noted that the debt remains a debt and no one will be able to change it. "They had better say explicitly that they want to increase the foreign state debt to 70% instead of choosing winding paths," he said.     

To recall, the Parliament of Armenia approved the amendments to the Law on State Debt. Introducing the bill, Deputy Minister of Finance, Chief Treasurer Atom Jhanjugaszyan said the state debt of Armenia must not exceed 60% of the GDP for the previous year.  If the state debt exceeds 50% of GDP, the budget deficit must not exceed 3% of GDP of the previous three years.  If passed, the amendments will enable the government to establish the ceiling of the state debt not least because the Central Bank's funds have no significant impact on the financing of the state budget deficit. The bill looks to regulate the issue and suggests replacing the idea "state dept" with the "government debt."

According to the National Statistical Service of Armenia, the state debt totaled 2.110 trillion drams ($4.442 billion) or 46.6% of GDP.  Armenia's state debt as of April 1 2015 totaled 2.177 trillion drams or $4.620 bln with a 4.4% growth for Mar and 3.2% growth for Q1 2015.  The debt burden per capita increased from $1500 to $1540 for Q1 2015.  The foreign debt burden rose from $1300 to $1305 (versus $550 in 2009). Experts say, due to high migration, the number of the population has decreased tangibly from the official statistical data (3.007 million people in Q1 2015 versus 3.010 million people in 2014, 3.017 million people in 2013 and 3.027 million in 2012). In fact, the foreign debt burden per capita in much higher.  In 2009-2013 the foreign debt accounted for 35%-38% of GDP versus 30% in 2008. In addition, the foreign debt grew by 21% amid slackening GDP growth - from 13.7% to 6.9%. The Government forecasts a growth of the state debt from $4,442 billion in 2014 to $4953 billion envisaged in the state budget 2015 (a 6% yoy and 8% for two years). The draft state budget 2015 envisages a growth of the foreign debt to $4.129 billion.