Tuesday, December 12 2017 13:59

ArmInfo. The Armenian authorities are making an attempt to legitimize the illegality of using previously attracted loans. Mikayel Melkumyan, Vice Speaker of the National Assembly of the Republic of Armenia, stated this on December 12 from the rostrum of the National Assembly, commenting on the draft amendments to the laws on the budget system and on the state debt submitted by the government.

According to Melkumian, there are still no estimates on the effectiveness of using previously attracted loans. Moreover, without these estimates, the government decided to establish new "rules of the game" in conditions, and, under conditions under which the country was in the risk zone. International practice envisages the solution of such problems, but the same international practice obliges the governments of states to have a strategy for managing public debt, as well as forecasted trends of future developments. In the conditions of Armenia, all this is not present. No, for example, the composition and structure of public debt, as there is no diagnosis of a way out of this situation.  An analogous point of view is shared by the deputy from the Yelk faction Mine Tandilyan. According to her, the new rules of the game offered by the government of the country will not solve the problems with the manageability of the state debt, since the same government operates in the republic, the same people are from power, who for years accumulated the state debt of the country. Consequently, the MP continued, it is necessary to record that the authorities were acting ineptly without taking any action to treat the Armenian economy. In this context, the deputy does not have any confidence that after a certain period of time after the introduction of the new rules, the authorities of the republic will not again come up with new justifications for new challenges. "Of course, the rules of the game are necessary, but those events that are planned to be implemented should have been used for a long time," the deputy believes.Note that the Armenian parliament at the meeting on December 12 in the first reading started discussions on the draft amendments to the laws on the budget system and on the state debt submitted by the government of Armenia. 

According to RA Minister of Finance Vardan Aramyan, the Armenian government proposes to provide three thresholds for the level of public debt - 40%, 50% and 60% for the medium and long term. Thus, if the threshold of the national debt exceeds 40%, capital expenditures should exceed the deficit of the state budget. When the 50% norm is exceeded, the requirements are toughened and, in addition to the previous requirement, restrictions are imposed on current expenses. Thus, according to the government, it will earn a "golden rule" of debt, which provides for the possibility of financing by borrowing exclusively capital expenditures. Approaches are further tightened after the national debt exceeds 60% of GDP - current expenditures are linked to domestic revenues, especially with tax revenues.In addition, if the previously acceptable threshold of public debt of 60% was set in relation to GDP for the past year, then under the new rules it will be considered in relation to GDP for the current year. At the same time, in case of force majeure - a global natural disaster, war, in the conditions of a crisis economy, the government will be allowed to exceed 60%.  Exceeding this acceptable threshold, the law will oblige the government to submit to the National Assembly a program in which it will be shown how the Cabinet of Ministers plans to reduce the level of public debt. Under the new rule, the Ministry of Finance records that since the republic has exceeded 40% of the state debt in GDP, further borrowing can be used only for capital construction, which creates the potential that will ensure the country's growth in the near future. In addition, having established a 50% threshold, the Ministry of Finance is seeking in the future to tie hands to those politicians who, based on populist considerations, within the framework of electoral programs, decide to make a sharp increase in pensions and wages. Armenia already knows the situation when, due to external borrowing, it was financed mostly by current expenses. "Now this will be done away with, and borrowing will go to capital investments that increase the potential for economic growth.  It should be noted that by the end of 2017 the aggregate state debt of Armenia will grow to $ 6.813 billion or 60.3% of GDP from $ 5.942 billion (according to the results of 2016), instead of the budgeted by $ 6.512 billion or 57.3% of GDP in the "Budget 2017". Thus, for the year, increasing the debt burden by $ 871 million According to the budget message next year, the state debt will grow by $ 396 million to $ 7.209 billion. According to the State Debt Strategy for 2018-2020, in 2018, the debt service is planned to be $ 666 million, in 2019 - $ 710.7 million, and in 2020 - already $ 1.37 billion. (at an estimated rate of 1 US dollar / 483.83 others).  ArmInfo analysts believe that the growing external debt and high migration in Armenia increasingly deepen the specific debt burden per capita to $ 2.1 thousand by July 1, 2017, out of which $ 1.7 thousand comes from external debt. According to various estimates, by the end of 2017 this figure will be $ 2,240, which if you blindly believe the official statistics on the number of the resident population of the country (2.9 million people).