Per capita debt in Armenia reaches $1,590 on Oct 1 2015, amid steadily growing foreign debt and migration

 

Armenia's state debt totaled 2.273 trillion drams or $4.799bln on Sept 30, growing by 7.7% for 9 months, including 3.2% in Q1 (due to growth in March), 1.7%in Q2 (down in May and June), and 2.7% in Q3 

(2.1% in Jul, 1.7% in Aug, and 1,1% decline in Sept). Domestic debt of the government accounts for 14.8% or 336.6bln drams of total ($707.9mln) with an 8% growth for 9 months of 2015, including 5.1% in Q1 (down in March), 0.2% in Q2 (down in May), and 2.5% in Q3 (1.8% growth in Jul, 1% decline in Aug, and 1.6% growth in Sept).   Government bonds accounted for 88.5% of the total domestic debt of 

the government from versus 92.8% for 9 months of 2014. In absolute term, the government bonds grew 2.9% to 297.8 bln drams ($626.1mln). Armenian Eurobonds accounted for 11% (vs. 6.2%) of total government bonds (doubled in absolute terms to 37bln drams or $77.7mln). Trade loan accounted for 0.3% (vs.0.6%) of total government bonds (down 50% in absolute terms to 951.2mln drams or $2 mln). The remaining are guarantees that were left unchanged - 0.3% of total (growing 4.4% in absolute terms to 974.9mln drams or $2.1mln). 

 

Government of Armenia anticipates a growth of the state debt from $4.442bln in 2014 to $4.953 bln envisaged in the draft state budget 2015.  The state debt will grow 6% year over year (y-o-y), and 8% 

last two years. The draft budget 2015 envisages a growth of the foreign debt to $4.129 (up 9% y-o-y and 5.8% for last year), versus $3.785 bln in 2014 and $3.904 bln in 2013. Since 2013 through 2015, 

the share of the foreign debt in total state dent will fall from 85% to 83.4%. CBA's share in total foreign debt was 13% in 2013, 11.6% in 2014, while in 2015 it is anticipated that it will grow to 12/2% 

($505mln). Armenia's domestic debt will reach $824mln or 16.6% of total state debt, with a 25.6% y-o-y growth and 20.3% growth versus 2013.

 

According to ArmInfo's analysts,  the dynamics of the last five years show that gold and foreign exchange reserves covered more than half of the foreign debt. Reserves began shrinking, amid steadily growing 

foreign debt.  In 2008 (with crisis) the reserves fell 15.2%, in 2009 (at the height of crisis and 22% depreciation of the national currency in March), the funds raised from foreign sources enabled 

increased the reserves by 42.4%. Then in 2010, the gold and forex reserves decreased by 7 %, in 2011 grew by 3.5% and then again fell  by 7% in 2012. In late 2013, this indicator was increased by 25,2% 

with the significant replenishment of the reserves in Q3.  

 

However, the tangible devaluation of the national currency in Q4 2014 (mainly in Dec) and the reserve funds put into circulation to soften the currency fluctuations resulted in a 34% decline of the gold and 

forex reserves. In late 2014, these reserves were enough to cover the foreign debt by 39% (versus 58% in 2013 and 49% in 2012). Armenia's foreign debt grew 13.5% for 2014 amid 3.4% GDP growth. The state debt accounted for 46.6% for late 2014, with the foreign debt accounting for 39.7% of GDP.  The debt burden per capita does not decrease from $1500, the foreign debt burden is still $1300 (versus $550 in 2009). Experts say, due to high migration, the number of the population has decreased tangibly from the official statistical data (3.010 million people in 2014 versus 3.017 million people I 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%. 

 

To recall, on Jan 1 2015, Armenia's state debt totaled 2.109 trillion drams or $4.4 bln (1.98 trillion drams in 2013), with foreign debt accounting for 1.8 trillion drams or $3.8 billion drams (1,6 trillion drams in 2013) and internal debt accounting for 311.7 bln drams or $656.3 mln (277.7 trillion drams in 2013). Gold and forex reserves totaled $1.5 billion versus $2.3 billion in 23013 and $1.8 billion in 2012.