State debt of Armenia keeps growing, reaching $5.3 bln as of May due to increase of foreign debt

ArmInfo. Growth of Armenia's state debt in Jan-Apr 2016 by 4% to $5.3 bln (2.5 trln AMD) is determined by increase of both foreign and internal debts. According to the preliminary data of the Finance Ministry provided to ArmInfo by the National Statistical Service of Armenia, the foreign debt of Armenia increased 5% to $4.5 bln (2.1 trillion AMD) in 4 months of 2016 amid growth of internal debt by 3% to $793.1 mln (379.6 bln AMD). In year-over-year terms foreign debt grew by 13.4% and internal debt by 14.9%, which resulted in increase of Armenia's state debt by 12.8%.

The government share accounts for $3.97bln or 89% of total foreign debt.  The Central Bank of Armenia (CBA) borrowed the remaining $490.9 mln or 11%.  The Government's foreign debt increased in Jan- Apr by 3.3% (versus 5.5% growth a year ago). A similar dynamics was observed at the CBA - by 3.2% growth in Jan-Apr (versus insignificant decline a year ago). The Government's foreign debt increased 14.3% year-on-year with that of the CBA growing 11.6% y-o-y.

Government bonds accounted for most of the internal debt growing from 87% to 89% in Jan-Apr 2016 ($706 mln or 338 bln AMD) with 17.3% y-o-y increase and 6.7% increase in Jan-Apr in absolute terms. Armenian Eurobonds accounted for 10.7% (down from 13%) and totaled $85.1 mln or 40.8 bln AMD of total (3.7% y-o-y growth and 13.1% decline in Jan-Apr in absolute terms). The remaining part is the guarantees (0.3% or $1.9 mln), the trade loans were zeroed. 

As of Jan 1 2016, the state debt of Armenia totaled 2.5 trillion drams or $5.1 billion (versus 2.1 trillion in 2014 and 1.9 trillion in 2013). The foreign debt accounted for 2.1 trillion drams or $4.3 billion in total state debt (versus 1.8 trillion in 2014 and 1.6 trillion in 2013). The internal debt accounted for 368.4bln drams or $761.5 bln. Gold and currency reserves in 2015 totaled $1.8bln.

Growing foreign debt of Armenia and high migration will further worsen the debt burden per capita, which has increased since 2015 to $1.7 thousand on April 1 2016. This indicator for the foreign debt alone increased from to $1.5 thousand (versus $550 in 2009). If the real scale of migration were considered the foreign debt burden per capita would be much higher. The coverage of foreign debt by gold and foreign exchange reserves made up 41.1% by 2016, exceeding the indicator of 2014 by 39.3% and yielding to the level of 2013 by 57.7%. The result of this according to ArmInfo's analysts is that in 2013 amid growth of gold and foreign exchange reserves by 27.8% (to $2.3 bln) rates of foreign debt growth were not tangible (5% to $3.9 bln), after which in 2014 amid decline of gold and foreign exchange reserves by 34.8% (to $1.5 bln) foreign debt increased by 13.7% (to $3.8 bln) and in 2015 both reserves and foreign debt demonstrated upward trend. Thus, in 2015 gold and foreign exchange reserves increased by 20% and 19% respectively. The experts forecast that in 2017 Armenia's foreign debt will increase, after which it will start to decline.