Growing foreign debt of Armenia and high migration increased debt burden per capita

 

The coverage of foreign debt by gold and foreign exchange reserves made up 41.1% by 2016, exceeding the indicator of 2014 by 39.3% and yielding to the level of 2013 by 57.7%.  In 2013 amid growth of gold and foreign exchange reserves by 27.8% (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 34.8% (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 20% and 19% respectively. The experts forecast that in 2017 Armenia's foreign debt will increase, after which it will start to decline. 

 

According to the preliminary data of the Finance Ministry provided to ArmInfo by the National Statistical Service of Armenia, as of April 1 2016, the state debt of Armenia increased 13%, and in Q1 alone - 2.3%.  The foreign debt accounted for 85% of the total state debt, 

with the remaining 15% being the internal debt.  Foreign debt increased 12.3% year-on-year, and 2.1% for Q1 2016 alone (versus 2.8% growth a years ago and 0.9% growth in the same period of 2014) to $4.4bln. The internal state debt totaled 380.4bln drams or $790.4mln with a 13.6% y-o-y growth and 3.8% growth for Q1 2016 alone. 

 

The government share accounts for $3.9bln or 89% of total foreign debt.  The Central Bank of Armenia (CBA) borrowed the remaining $487.9 mln.  The Government's foreign debt increased in Feb-Mar by 0.5%-1.4% and by 2% in Q1 2016 (versus 3.6% a year ago). A similar 

dynamics was observed at the CBA - by0.5%-1.7% growth in Feb-Mar and 2.4% in Q1 (versus 3% decline a year ago). The Government's foreign debt increased 12.1% year-on-year with that of the CBA growing 13.3% y-o-y.  Government bonds accounted for most of the internal debt growing from 87% to 89% in Q1 2016 (18.1% y-o-y increase and 5.6% increase in Q1 in absolute terms). 

 

Armenian Eurobonds accounted for 11% (down from 13%) of total (7.2% growth and 12.4% in absolute terms), with the remaining part is the guarantees (0.3%), the trade loans were zeroed.  According to ArmInfo's analysts, the gold and currency reserves covered almost 56% of the foreign debt, a higher indicator was registered only in 2013. After the growth in 2007 by 54.5% in 2007, in 2008 the gold and currency reserves fell 17.6%. Then in 2009, in the peak of the crisis and devaluation of the national dram by 22% on March 3, the funds raised from the external sources helped increasing gold and currency reserves by 42.9%.  

 

In 2010, this indicator fell 7%, then increased 3.5% in 2011 and again fell 7% in 2012. In 2013, this indicator increased 27,8%, but with the sharp devaluation of the national currency in Dec 2014 and the funds used from the reserves to soften the exchange rate fluctuations resulted in a 34.8% decline of the reserves. 

 

In 2015, the upward trends were restored by 20% only, and the debt was covered by 41% (versus 39% in 2014, 58% in 2013 and 49% in 2012).  The foreign debts of Armenia increased by 16% in 2015 amid 3% GDP growth versus 13.5% and 3.6% growth in 2014, respectively. 

 

The share of the total state debt in GDP made up 48.8% in 2015, with the share of the foreign debt in GDP totaling 41.5% versus 46.6% and 39.7% consequently in 2014.    

 

The debt burden per capita has increased since 2015 to $1.7 thousand on April 1 2016. This indicator for the foreign debt alone increased from $1.3 thousand to $1.5 thousand (versus $550 in 2009). Experts say the high migration, the number of the population has decreased 

tangibly from the official statistical data.  

 

As of Jan 1 2016, the state debt of Armenia totaled 2.5 trillion drams or $5.1 billion (versus 2.1 trillion in 2014 and 1.9 trillion in 2013). The foreign debt accounted for 2.1 trillion drams or $4.3 billion in total state debt (versus 1,.8 trillion in 2014 and 1.6 trillion in 2013). The internal debt accounted for 368.4bln drams or $761.5 bln. Gold and currency reserves in 2015 totaled $1.8bln.