Wednesday, February 14 2018 18:49
Naira Badalian

Expert: Armenia inefficiently uses external borrowing

Expert: Armenia inefficiently uses external borrowing

ArmInfo. Until now, the credit  funds attracted by Armenia have been used rather inefficiently. Head  of the Employers' Union of Armenia Gagik Makaryan expressed this  opinion at a meeting with journalists.

In particular, as stated by Makaryan, the excessive dispersion of  funds can be stated with confidence in the sphere of education,  ecology, road construction, community management. The reason is that,  according to the expert, very often political interests prevail over  economic and social interests.

In addition, according to the economist, the previous two issues of  Eurobonds turned out to be ineffective.  "It was a utopia, and their  effectiveness is not clear to me personally," he said. At the same  time, he expressed hope that the next tranche will be implemented  with greater care, since the early ones were initiated by the former  government of Armenia.

Nevertheless, the expert does not see any problems in terms of  servicing the growing national debt of the country, but only if the  outpacing rates of economic growth remain. "We can not say that  servicing the national debt will be easy, especially in 2020, but I  think we will manage," concluded the head of the Union of Workers.   By now Armenia has carried out two issues of Eurobonds. The first  issue was made on September 19, 2013 - by $ 700 million and the  government repaid ahead of schedule the loan taken from Russia for $  500 million. The second tranche of sovereign bonds worth $ 500  million for a period of 10 years and with a yield of 7.5% Armenia  carried out 19 March 2015. The proceeds from the second issue of  Eurobonds were $ 487 million. Part of the amount received from the  sale of the bond tranches, in the amount of $ 205 million, went for  the purchase of the first issue of Eurobonds with maturity in 2020.  The remaining amount was transferred to the treasury account of the  Republic of Armenia and the country's budget system. As the experts  stated, this, in fact, was the most expensive external debt that was  ever attracted by the government of the country.

As Arshaluys Margaryan, the head of the State Debt Department of the  Ministry of Finance of Armenia, told ArmInfo the year before, the  Armenian government plans to issue a new issue of Eurobonds only in  early 2020. According to him, if by the end of 2019 Armenia does not  face an unconventional situation, when the only solution is a new  issue of Eurobonds, another issue is expected to ensure the repayment  of the state debt in 2020. The volume of the issue, as noted by  Margaryan, will be similar to the amount that will be spent on  servicing the state debt on Eurobonds - $ 500 million or even  slightly higher.

Meanwhile, according to the National Statistical Service, the  aggregate state debt of Armenia at the end of 2017 amounted to $  6.774.6 million, an increase of 14% or $ 832.5 million compared to  the end of 2016. At the same time, the external state debt of the  republic at the end of 2017 was $ 5 494.9 million, an increase over  the year by 14.3%, or by $ 689.3 million. According to the State Debt  Strategy for 2018-2020, in 2018, $ 666 million will be allocated for  debt servicing, in 2019 - $ 710.7 million, and in 2020 - already $  1.37 billion. The growing national debt and continuing migration in  Armenia have already deepened the specific debt burden per capita to  $ 2.3 thousand by January 1, 2018, of which over $ 1.8 thousand comes  from external debt, against $ 2 thousand and $ 1.6 thousand  respectively, by January 1, 2017. Given the actual scale of  migration, the burden of public debt per capita would be much higher.  According to statistical data, as of January 1, 2018 the population  of the RA amounted to 2.973 million, against 2.986 million a year  earlier and 3.274 million five years earlier.

According to the budget, by the end of 2018, the state debt, from $  6.8 billion by the end of this year, will grow to $ 7.2 billion and  amount to 60% of GDP. According to the World Bank forecasts, the  share of Armenia's national debt in GDP will grow to 59.6% in 2018,  from 58.9% in 2017, and the external debt to 48.4% from 47.9% in  2017. In 2019, the World Bank predicts a decline in the share of  public debt in GDP to 59.3%, and external debt in GDP - up to 48%. 

POST A COMMENT
Input digits     


News
Negotiations on possibility of buying part of Russia`s share in  equity capital of EDB are underway with all founding countries of  BankNegotiations on possibility of buying part of Russia`s share in  equity capital of EDB are underway with all founding countries of  Bank
Number of plastic cards up as capital relocated to Armenia Number of plastic cards up as capital relocated to Armenia 
AMD 4,248,945 to AMD 4,248,945 to "QaylTech": The August beneficiary of "The Power of One Dram" is "The Rehabilitation City of Heroes" - psychological rehabilitation center
Airlines, hotels, banks, rental and leasing sectors registered  significant increase in service volumes in ArmeniaAirlines, hotels, banks, rental and leasing sectors registered  significant increase in service volumes in Armenia
Cargo traffic down, passenger traffic up in Armenia in first half,  2022Cargo traffic down, passenger traffic up in Armenia in first half,  2022
Growth of trade sector was facilitated by increase in activity in  wholesale and car trade marketsGrowth of trade sector was facilitated by increase in activity in  wholesale and car trade markets
4.5% increase in proceeds of Armenia`s communication sector in first  half 20224.5% increase in proceeds of Armenia`s communication sector in first  half 2022
188,856 tourists visit Armenia this July188,856 tourists visit Armenia this July
Accelerated growth of Armenian industrial sector was driven by  processing industryAccelerated growth of Armenian industrial sector was driven by  processing industry
Veolia Djur proposes to raise water tariff in ArmeniaVeolia Djur proposes to raise water tariff in Armenia
State Revenue Committee of Armenia starts active administration in  pursuance of law State Revenue Committee of Armenia starts active administration in  pursuance of law " On Non-Cash Transactions"
Armenia`s premier calls for revising economic programmes Armenia`s premier calls for revising economic programmes 
EDB to allocate $25 million to implement Armenia`s largest livestock  programEDB to allocate $25 million to implement Armenia`s largest livestock  program
Double-digit growth in economic activity in Armenia is accompanied by  surge in imports and exportsDouble-digit growth in economic activity in Armenia is accompanied by  surge in imports and exports
Armenian business forum to be held in Yerevan for second timeArmenian business forum to be held in Yerevan for second time
Production of aluminum foil in Armeniaincreased by 8% in June 2022Production of aluminum foil in Armeniaincreased by 8% in June 2022
Metallurgy industry of Armenia sums up H1 2022 with a 7% declineMetallurgy industry of Armenia sums up H1 2022 with a 7% decline
EDB: Armenia ranks first among member countries with small economies  in current investment portfolio of EDB EDB: Armenia ranks first among member countries with small economies  in current investment portfolio of EDB 
EADB to allocate $37mln for construction of 11 solar power stationsEADB to allocate $37mln for construction of 11 solar power stations
Apartments in Yerevan rose in price by 5.4% in Q2, with increase in  transactions for their purchase and sale by 30.8%Apartments in Yerevan rose in price by 5.4% in Q2, with increase in  transactions for their purchase and sale by 30.8%
 Further rise in food prices in Armenia  Further rise in food prices in Armenia 
Loan payoff with another bank via AppLoan payoff with another bank via App
Deputy Minister: 12 more lanes added to 13 existing lanes of Upper  Lars checkpointDeputy Minister: 12 more lanes added to 13 existing lanes of Upper  Lars checkpoint
Ferry communication to be launched this month - minister Ferry communication to be launched this month - minister 
Armenia is among the TOP-5 destinations for Russian tourists this  autumArmenia is among the TOP-5 destinations for Russian tourists this  autum
Austria to invest in Armenia`s SyunikAustria to invest in Armenia`s Syunik
Gyumri Breeding Station reports three-fold growth in barley output Gyumri Breeding Station reports three-fold growth in barley output 
CBA: In February-June 2022, demand deposits of non-residents  increased significantly in Armenian banksCBA: In February-June 2022, demand deposits of non-residents  increased significantly in Armenian banks
CBA: High demand leads to the expansion of the inflationary  environment and maintenance of high inflation expectations, but dram  appreciation partially neutralizes the price increaseCBA: High demand leads to the expansion of the inflationary  environment and maintenance of high inflation expectations, but dram  appreciation partially neutralizes the price increase
Minister: The share of the mining industry in the total volume of  Armenia`s exports has decreasedMinister: The share of the mining industry in the total volume of  Armenia`s exports has decreased
Statistical data, real situation in agricultural sector different -  minister Statistical data, real situation in agricultural sector different -  minister 
FLYONE ARMENIA launches flights to Domodedovo International AirportFLYONE ARMENIA launches flights to Domodedovo International Airport
Armenia, Iran deepen cooperation in mining industryArmenia, Iran deepen cooperation in mining industry
CBA raises refinancing rate from 9.25% to 9.5% CBA raises refinancing rate from 9.25% to 9.5% 
23.9% rise in petrol prices in Armenia in first half of 2022 23.9% rise in petrol prices in Armenia in first half of 2022 
Armenia meets Russia`s brand demandArmenia meets Russia`s brand demand
Armenia is not ready to open the land border with Turkey: ExpertArmenia is not ready to open the land border with Turkey: Expert
Armenia, Qatar discuss possible areas of bilateral cooperationArmenia, Qatar discuss possible areas of bilateral cooperation
Massive arrival of Russians to Armenia, along with movement of their  capital, ensured 7-multifold increase in net inflow of remittances  from Russia in Q2 2022Massive arrival of Russians to Armenia, along with movement of their  capital, ensured 7-multifold increase in net inflow of remittances  from Russia in Q2 2022
Ardshinbank offers a new type of loan for small and medium enterprises.Ardshinbank offers a new type of loan for small and medium enterprises.
Armenia among priority partners of Austrian Development AgencyArmenia among priority partners of Austrian Development Agency
International reserves of Armenia reaches historical maximum by July  2022International reserves of Armenia reaches historical maximum by July  2022
More funds for government-sponsored medical services More funds for government-sponsored medical services 
South Caucasus Railway delivers production equipment from Yerevan to  KrasnodarSouth Caucasus Railway delivers production equipment from Yerevan to  Krasnodar
4% inflation expected in Armenia in medium-term 4% inflation expected in Armenia in medium-term 
Ameriabank leads in list of largest taxpaying banks in ArmeniaAmeriabank leads in list of largest taxpaying banks in Armenia
Armenia`s communication companies pay 25% less as taxes to budget in  1st half of 2022Armenia`s communication companies pay 25% less as taxes to budget in  1st half of 2022
Over 500 Armenian servicemen to benefit from soft lending programmeOver 500 Armenian servicemen to benefit from soft lending programme
Washington to allocate $120mln to Armenia for democratic development,  economic stabilityWashington to allocate $120mln to Armenia for democratic development,  economic stability
17.1% increase in food prices significantly affected low-income  citizens of Armenia - study17.1% increase in food prices significantly affected low-income  citizens of Armenia - study
Armenia, Ethiopia consider development of cooperation in e-governance  and technology educationArmenia, Ethiopia consider development of cooperation in e-governance  and technology education
Armenian assets of GeoProMining Group of Compaines significantly  increase payments to state budgetArmenian assets of GeoProMining Group of Compaines significantly  increase payments to state budget
Vardan Aramyan pointed to risks for Armenia`s GDP and loss of  potential of Russian economy amid IMF`s Vardan Aramyan pointed to risks for Armenia`s GDP and loss of  potential of Russian economy amid IMF`s "Gloomy and More Uncertain"  forecast
Armenia`s vice-premier hosts AMD company vice-presidents Armenia`s vice-premier hosts AMD company vice-presidents 
MFA: Sanctions against Russia have their negative direct or indirect  impact on Armenia`s economic development MFA: Sanctions against Russia have their negative direct or indirect  impact on Armenia`s economic development 
Mirzoyan, Lipavsky note need to fully realize potential of trade and  economic bilateral relationsMirzoyan, Lipavsky note need to fully realize potential of trade and  economic bilateral relations
Zangezur Copper-Molybdenum Combine topped list of taxpayers in  Armenia in H1 2022Zangezur Copper-Molybdenum Combine topped list of taxpayers in  Armenia in H1 2022
Converse Bank completes distribution of bonds ahead of scheduleConverse Bank completes distribution of bonds ahead of schedule
Armenia implements intellectual property development strategyArmenia implements intellectual property development strategy
Iran successfully expands trade with Armenia: Iran TPO headIran successfully expands trade with Armenia: Iran TPO head
Read more


Exchange rates
16.08.2022
RUB6.620.02
USD406.09-0.10
EUR411.41-2.90
GBP488.16-2.80
CAD314.46-0.44
JPY30.25-0.21
CNY59.96-0.30
CHF427.24-2.32