Finance Ministry: State debt of Armenia has already reached $5.6 bln but the tendency of internal debt growth will revive financial market

ArmInfo. By October 2016 Armenia's state debt grew to $5.6 bln from $5.1 bln at the end of 2015. The share of government is more than 91% or $5.1 bln, Head of Public Debt Management Department of Armenian Finance Ministry Arshaluys Margaryan stated at today's press conference. "Armenia is one of the countries with low debt burden in the world. We have not reached any critical thresholds on any figure", he stated referring to international standards developed by experts from IMF, WB, ADB and UN.

According to Margaryan one of positive trends on state debt is reorientation on internal resources and increase of internal debt of Armenia within recent 2 years testifies to this. "Growth of internal debt is always priority for us in strategy of state debt management. This year there has been obviously such a tendency and it should lead to revival of financial market of the country, increase of society's trust towards government and other positive changes", the Head of the Department mentioned.

At the same time in a talk with ArmInfo's correspondent he added that no regular (third) issue of Armenian euro bonds in 2017 is planned. However, among negative facts the expert mentioned growth of share of servicing debt interest rate within budget expenditures, which increased to 8.7% while earlier this indicator was 1.5-2.5%. "As a result, growth of expenditure items is not distributed by economy sectors and is aimed at servicing debt only", he noted. According to the expert growth of economy to 6-7% would be one of efficient solutions of the current situation.

In a talk to ArmInfo's correspondent Margaryan added that starting from 2017 most likely state debt correlation to GDP will reduce due to expected economic growth that will be ensured by the new governmental program to be presented to society in the nearest future. "An ambitious team has been formed and you will see that this program will lead to positive results both in short-term and long-term perspectives", he assured.

By preliminary data of the Finance Ministry of Armenia provided to ArmInfo by the National Statistics Service the state debt of Armenia increased 8% in Jan-Aug 2016 to $5.5 billion (2.6 trillion drams), as both foreign and domestic debt. The foreign debt grew 5.2% for 8 months of 2016 to $4.5 billion (2.2 trillion drams) amid 23.8% growth of the domestic debt to $943 million (447.7 billion drams). On year over year basis, foreign debt grew 9.8% and domestic ones - 37.6%. As a result, the state debt grew 14.6%.  Debt burden per capita in Armenia has exceeded $1.8 thousand as of Sept 1 2016, with foreign debt accounting for $1.5 thousand ($550 in 2009) of total.