KfW will provide 80 million euros for reforms in the field of irrigation, solid waste management and the introduction of agricultural insurance

ArmInfo. The German  Development Bank (KfW) will provide Armenia with a loan of 80 million  euros for budget assistance (coverage of the budget deficit). The  draft loan agreement was approved at a meeting of the Armenian  government on November 9.

As the Minister of Finance of Armenia Vardan Aramyan noted, the funds  will be issued in tranches of 40 million euros. in 2017-18 years. The  funds will be spent on reforms in the field of irrigation, solid  waste management and introduction of agricultural insurance  mechanisms. As part of the latter KfW will provide grants of  technical support in the amount of 8.3 million euros.

The loan agreement, as explained by the head of the Ministry of  Finance, is stipulated by the state budget of the country for 2017,  where it is indicated that 40 million euro from the deficit of $ 220  million will be covered by this credit assistance, he said.  The loan  will be issued for 15 years, with a grace period of 5 years. The  interest rate is fixed (it is fixed for each tranche), the debt  payment is 0.25% in relation to the unused loan amount (for tranche 1  is calculated 4 months after the signing of the agreement, for  tranche 2 is calculated 16 months after the signing of the  agreement), a one-time The commission fee is 1% of the loan amount,  the maturity of the principal amount is 15 years, the grace period is  5 years, the technical support funds provided under the program total  8339139.38 euros. The effective interest rate on the loan is about  2.55%.

Meanwhile, as of December 31, 2016, the state debt of Armenia was  2.875.6 billion drams or $ 5.942.1 million (56.6% of GDP compared to  48.7% in 2015). Over the past year, the republic has increased its  debt portfolio by 419.3 billion drams or $ 864.4 million In  January-September, 2017, the level of the country's national debt  reached the level of 3 017.8 billion drams or $ 6.308 billion, of  which the government debt amounted to 2 725.3 billion drams or $  5.696.6 billion and the Central Bank's debt - 292.5 million AMD or $  611.3 million ($ 1 = 478.41). By the end of 2017, Armenia's total  debt will reach $ 6.8 billion. Following the results of 2018, the  amount of state debt will continue to increase. According to  forecasts, by the end of next year the total state debt will be about  60% of GDP or over $ 7.2 billion. State debt (interest rate) next  year will require 140.5 billion drams (about $ 300 million), instead  of 120.3 billion drams in 2017 and 98.3 billion drams in 2015.  Armenia's state debt servicing in 2020 will cost already $ 921  million. The growing national debt and high migration in Armenia have  already deepened the specific debt burden per capita to $ 2.1  thousand by July 1, 2017, of which $ 1.7 thousand comes from external  debt.