Friday, December 23 2016 18:15
Naira Badalian

Minister of Finance: Public debt of Armenia to grow to 55.5% of GDP by the end of 2016 and to 56.8% in 2017

Minister of Finance: Public debt of Armenia to grow to 55.5% of GDP by the end of 2016 and to 56.8% in 2017

ArmInfo. Public debt of Armenia will grow to 55.5% of GDP by the end of 2016 and to 56.8% in 2017, according to the forecasts of the Finance Ministry of Armenia, which was presented at the today's press conference by Minister of Finance Vardan Aramyan.

According to Aramyan Armenia's public debt will total $5bln 905mln, or 2 trln 844 bln AMD by the end of the year. At year-end 2015 the debt totaled $5 bln 078 mln or 2 trln 456 bln drams, while in the end of 2017 it will grow to $6 bln 338 mln or 3 trln 052 bln drams according to forecasts. In the public debt, the government's debt will amount to $5bln 395mln, or 2 trln 428 bln AMD, of which the foreign debt is $4bln 847mln, or 2 trln 334 bln AMD, and the internal debt is $1bln 58mln, or 510 bln AMD. The Central Bank's debt will amount to $511 mln, or 246 bln AMD. 80.5% of government debt is in foreign currency, of which 87.4% in fixed interest rate.

According to the Minister $71 mln or 33.7 bln drams will be allocated for redemption of foreign debt. It is planned to allocate 98.4 bln drams for servicing of government debt. 10 loan agreements were signed between the government of Armenia and international donors in 2016 amounting to $477 mln. Meanwhile, this situation should not raise concerns according to the Finance Ministry. There is a schedule of government debt redemption, which will last till 2052 and no problems are foreseen in the debt servicing, Aramyan noted.

To note, according to Armenian Finance Ministry's data as of October 31, the lenders of the governmental debt are International Development Association (IDA), part of the World Bank - 38.8% of the state debt, International Bank for Reconstruction and Development - 15.8%, Asian Development Bank - 13.2%, International Monetary Fund - 4.8%, Eurasian Development Bank - 3.4%, EU - 2.4%, European Investment Bank - 2.2%, International Fund for Agricultural Development - 2.1%, OPEC Fund for International Development - 1.4%, and the European Bank for Reconstruction and Development - 0.6%.  Among the lending countries the leaders are Japan - 8.2% and Germany - 3.6%, while shares of the US and Russia are 0.8% and 0.3%, respectively. n the structure of the state debt, long-term borrowings make up 73.7%, mid-term ones (9.3 years) - 22.5%, short-term ones - 3.8%. According to the Finance Ministry's forecast, in 2017-2019 the government debt/GDP index will exceed 50%, and starting from 2018 the budget deficit will not exceed the 3% threshold. A number of measures will be taken to develop the retail market of government bonds. At present over 1,000 individuals (citizens of Armenia) keep their savings as government bonds worth 4 bln AMD.

In 2017 8.8% of state budget will be spent on servicing of the state debt while in 2020, nearly $921 mln will be allocated for the loan redemption and servicing, of which $164 mln will be spent on payment of interest rates. The Finance Ministry is going to redeem $500mln through issue of Eurobonds.

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