ArmInfo. The Eurasian Fund for Stabilization and Development (EFSD) is ready to consider the Armenia's applications for programs on budget support for 2019-2020, Tigran Kostanyan, acting director of the project group for financial loans.
According to him, the Fund has a positive experience of working with Armenia. Last year, a three-year program to support the state budget of the country in the amount of $ 300 million was successfully completed. "An evaluation of the implementation of this program will be prepared in the near future, which will be submitted to the EFSD Council for consideration," Tigran Kostanyan said, pointing out the problematic situation with the debt sustainability of the country. "The level of public debt approached its threshold values, which led to an objective need to specify programs, including investment programs, and this, in turn, led to the suspension of a sample of funds, which is an objective response of the authorities aimed at preventing growth of public debt. In the context, it is necessary to consider adjustments in macroeconomic policy, rather than in terms of freezing credit programs, "the project team leader noted, saying at the same time that in support of state budgets for 2019-2020 the Fund did not receive applications from Armenia. "But when they are received by the EFSD, they will certainly be considered," Tigran Kostanyan stressed.
Earlier in an interview with ArmInfo Atom Janjughazyan, RA Minister of Finance, informed that starting from 2021 the Armenian government intends to refuse external financial assistance in the form of budget loans. According to Janjughazyan, the Ministry of Finance is making efforts not to attract further loans for budget assistance. However, in 2019 and 2020, the "Medium-Term Spending Program of Armenia for 2019-2021" provides for the attraction of these funds in order to ensure financial stability. And, if in the current year Armenia plans to attract $ 98.5 million through budget assistance programs, next year, through this toolkit, $ 153.1 million will be received by the state. As the chief financier of Armenia pointed out, today many consider this tool to be quite attractive, since the budget support loan differs from other types of borrowing in that it does not have a program of specific targeted spending and is provided on concessional terms.
Nevertheless, the financial authorities of Armenia believe that such kind of soft loans are dangerous because the country can become completely dependent on foreign borrowing. In addition, given the fact that at present the structure of the economy and its "content" has changed for the better, the country should gradually abandon third-party budget assistance.
To recall, by the end of 2018, according to the law "On the State Budget of Armenia for 2018", the state debt of Armenia should be about $ 7.2 billion. According to forecasts laid down in the draft budget for 2019, as of December 31, 2018, the public debt of Armenia will make $ 7,053 million or 55% of GDP. On November 4, 2015, the Government of Armenia and the Eurasian Development Bank signed an agreement on the provision of a financial loan of $ 300 million. The funds from the loan were intended to neutralize possible short-term and medium-term risks in the implementation of foreign exchange policy and to ensure the highest economic growth rates. The loan is designed for 20 years, with a 10-year grace period at a rate of 2% per annum.
The EFSD (the former EurAsEC Anti-Crisis Fund) is a regional financial mechanism in the amount of $ 8.5 billion. In 2009, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan founded it. In particular, the fund provides financial loans to governments to support the budgets or balance of payments of member states. The Eurasian Development Bank (EDB) manages the funds of the EFSD. The EDB is an international financial organization established by Russia and Kazakhstan in January 2006 with the aim of promoting the development of the market economy of the participating states, their sustainable economic growth and the expansion of mutual trade and economic ties. The Bank's member states are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.