Armenia makes changes in the regulation of public debt

ArmInfo. Armenia makes  changes in the regulation of public debt. Amendments to the laws "On  the Budget System" and "On the State Debt" were adopted at the RA  National Assembly on December 20 in the second and final reading.

According to RA Minister of Finance Vardan Aramyan, the second  reading received 18 proposals from NA deputy Khosrov Harutyunyan,  most of which were accepted by the authors of the document. According  to the package, it is proposed to provide three thresholds for the  level of public debt - 40%, 50% and 60% for the medium and long term.  Thus, if the threshold of the national debt exceeds 40%, capital  expenditures should not exceed the deficit of the state budget. When  the 50% norm is exceeded, the requirements become tougher, and, in  addition to the previous requirement, there are restrictions on  current expenses. 

Thus, according to the government, it will earn a "golden rule" of  debt, which provides for the possibility of financing by borrowing  exclusively capital expenditures. Approaches are further tightened  after the national debt exceeds 60% of GDP - current expenditures are  linked to domestic revenues, especially with tax revenues.  In  addition, if the previously acceptable threshold of public debt of  60% was set in relation to GDP for the past year, then under the new  rules it will be considered in relation to GDP for the current year.  At the same time, in case of force majeure - a global natural  disaster, war, in the conditions of a crisis economy, the government  will be allowed to exceed 60%. Exceeding this acceptable threshold,  the law will oblige the government to submit to the National Assembly  a program in which it will be shown how the Cabinet of Ministers  plans to reduce the level of public debt. Under the new rule, the  Ministry of Finance records that since the republic has exceeded 40%  of the state debt in GDP, further borrowing can be used only for  capital construction, which creates the potential that will ensure  the country's growth in the near future.

It should be noted that by the end of 2017 the aggregate state debt  of Armenia will grow to $ 6.813 billion or 60.3% of GDP from $ 5.942  billion (according to the results of 2016), instead of the planned in  the "Budget-2017" indicator of $ 6.512 billion or 57.3% of GDP. Thus,  for the year, increasing the debt burden by $ 871 million According  to the budget message next year, the state debt will grow by $ 396  million to $ 7.209 billion. According to the State Debt Strategy for  2018-2020, in 2018, the debt service is planned to be $ 666 million,  in 2019 - $ 710.7 million, and in 2020 - already $ 1.37 billion. (at  an estimated rate of 1 US dollar / 483.83 others).  ArmInfo analysts  believe that the growing external debt and high migration in Armenia  increasingly deepen the specific debt burden per capita to $ 2.1  thousand by July 1, 2017, out of which $ 1.7 thousand comes from  external debt. According to various estimates, by the end of 2017  this figure will be $ 2,240, which if you blindly believe the  official statistics on the number of the resident population of the  country (2.9 million people).