Wednesday, March 30 2016 16:58

"Civil Contract" intends to establish commission for conducting audit of Armenian foreign debt

ArmInfo. Civil Contract Party decided to put on the political agenda the issue of establishing a commission for conducting an independent audit of Armenia's foreign debt.

"Permanent growth of Armenia's foreign debt and non efficient use of the attracted funds raise numerous questions among the experts and public in general. For this reason the Civil Contract Party has decided to put on the political agenda the issue of establishing a commission responsible for conducting an independent audit of Armenia's foreign debt.  The main goals of this commission will be: analysis of legal basis for foreign debt, analysis of efficiency of loan funds, development of a program of steps for normalizing the situation, which will be aimed at the clarification of the current situation and will prevent possible corrupt practices", the statement of the party received by ArmInfo, reads.

The party's representatives will discuss the issue with the donor organizations. The Civil Contract Party calls for the experts and the beneficiaries to contact the representatives of the economic subgroup of the party for establishing cooperation in order to reach acceptable variants of problem solution during the discussions.

As of Jan 1 2016 Armenia's state debt exceeded the level of $5 bln, increasing debt burden per capita from $1.5 thousand to $1.7 thousand amid continuing growth of foreign debt and high rates of migration. Meanwhile, related to foreign debt, which reached $4.3 bln, the burden per capita grew from $1.3 thousand to $1.4 thousand (versus $550 in 2009). In fact, taking into account the real scales of migration, the foreign debt burden per capita is much higher. The coverage of foreign debt by gold and foreign exchange reserves totaled 41.1% as of Jan 1, 2016, exceeding the indictor of 2014 (39.3%), however still yielding to index of 2013 (57.7%). In 2013 amid growth of gold and foreign exchange reserves by 25.1% (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 34.7% (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 19% to $1.8bln, amid foreign debt growth rates by 16% to $4.3 bln. The experts forecast that in 2017 Armenia's foreign debt will increase to $5 bln, after which it will start to decline. Growth of domestic debt in Armenia by 18.2% in 2015 in parallel with growth of foreign debt by 16% increased total debt by 16.3%. At the same time, share of Government bonds in the foreign debt increased by 16.7% in 2015 and CBA bonds by 10.2%. In the domestic debt share of Armenian Eurobonds increased significantly (2.4-fold). In Jan-Dec 2014 foreign debt increased by 13.7%, amid growth of domestic debt by 11.4%, which increased total state debt of the country by 13.3%.  According to the preliminary data of Armenia's Ministry of Finance, provided to ArmInfo by Armenian National Statistical Service, total state debt of Armenia reached 2.453 trln AMD or $5.071 bln as of January 1, 2016, from which 85% is the share of foreign debt (2.085 trln AMD or $4.310 bln) and 15% is domestic debt (368.4 bln AMD or $761.5 mln).

The government share accounts for $3.833 bln of total foreign debt.  The remaining $476.3 mln were borrowed by the Central Bank of Armenia (CBA).  Share of Government and CBA in foreign debt has almost not changed-88.9% and 11.1% respectively (versus 88.4% and 11.6% in 2014). Share of Government bonds in domestic debt declined from 92.8% to 86.9% in 2015 (versus 97.8% in 2013). In absolute term, the government bonds grew 10.6% to 320.02 bln drams ($661.5mln). Share of Armenian Eurobonds increased from 6.2% to 12.9% (vs. 0.7% in 2013) of total government bonds (2.4-fold increase in absolute terms to 47.4bln drams or $97.9 mln).  Trade loan was zeroed since Nov 2015 (vs.0.6% in 2014 and 1.2% in 2013) of total government bonds. The remaining are guarantees that were left unchanged - 0.3% of total (down 5.7% in absolute terms to 961.5mln drams or $1.99 mln) (Average exchange rate of AMD according to CBA totaled 483.75 AMD/$1 as of Dec 31, 2015 versus 474.97 AMD/$1 on Dec 31, 2014 and 405.64 AMD/$1 on Dec 31,2013). 

Quarterly trend of foreign debt in 2015 was exclusively upward: in Q1-2.8% growth, in Q2-slackening of growth to 2%, in Q3- acceleration of growth to 2.7%, in Q4 growth to 7.7%. In 2014 foreign debt demonstrated diverse quarterly trend: in Q1-0.9% growth, in Q2-1.8% decline, in Q3-acceleration of decline to 3.1%, in Q4-sharp growth by 18.2%.  Domestic debt quarterly trend in 2015 was also exclusively upward: in Q1-5.2% growth, in Q2- slackening of growth to 0.2%, in Q3- acceleration of growth to 2.5%, in Q4- growth by 9.4%. In 2014 quarterly trend of domestic debt was also upward: in Q1-2.3% growth, in Q2-slackening of growth to 0.6%, in Q3-accelartion of growth to 3%, in Q4- accelartion of growth to 5.1%.  Meanwhile, Armenia's Government forecasted growth of Armenia's 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 envisaged 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 debt would fall from 85% to 83.4% but in fact level of 85% has not changed. CBA's share in total foreign debt was 13% in 2013, 11.6% in 2014, while in 2015 it was anticipated that it will grow to 12,2% ($505mln) but instead 11.1% ($476.3 mln) was ensured. Armenia's domestic debt was anticipated to reach $824mln or 16.6% of total state debt, with a 25.6% y-o-y growth and 20.3% growth versus 2013. But in practice lower rates of y-o- y growth (18.2%) ensured $761.5 mln or 15% of the total state debt.

To recall, on Jan 1 2015, Armenia's state debt totaled 2.109 trillion drams or $4.4 bln ($ 4.6 bln in 2013), with foreign debt accounting for 1.8 trillion drams or $3.8 billion ($ 3.9 bln in 2013) and internal debt accounting for 311.7 bln drams or $656.3 mln ($689.4 bln in 2013).  Armenia's GDP after 7.2% growth in 2012 sharply slackened growth rates to 3.3% in 2013, insignificantly increasing rates to 3.5% in 2014, and 3.1% in 2015.  Armenia's population according to statistical data decreased in 2012-2015 from 3.027 mln to 2.999 mln people. Experts say, due to high migration, the number of the population has decreased tangibly from the official statistical data.


Exchange rates

Government Bonds

Issue volume

10 billion

Volume of T-bills for placement

200 million

Volume of submitted competitive applications

200 million

Volume of satisfied bids

200 million

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Объем (инвал.)

200 000

0бъем (драм)

96 400 000