Tuesday, May 8 2018 14:50

ArmInfo. The trust of international financial markets to Armenian government bonds has increased over the past two years. This is stated in the message of the Ministry of Finance of Armenia regarding the results of the activity of the department in the sphere of public debt management of the republic.

In the sphere of government internal debt management, reforms were implemented in a number of sectors during the reporting period. In order to develop the market of state treasury bonds, reducing the operating costs of market participants, the auction system of initial bond placement was moved from the Central Bank's site to the Nasdaq OMX Armenia stock exchange, where bonds are traded on a T + n basis - transactions with bonds are deferred from the auction.

In addition, since April 25, 2017 for individuals Finance Ministry has launched an Internet site on government bonds gp.minfin.am operations. The main mission of the project is to increase public confidence in the state and to help individuals who wish to invest their money securely and effectively. As a result, the yield curve of state bonds fell by 3-4 percentage points.

"The international financial markets reacted to the efforts of the Armenian government in the sphere of public debt management, in particular, interest rates of the eurobonds issued by Armenia not only declined during the reporting period, but the gap (spread) in the interest rates between Armenian Eurobonds and international indicative bonds decreased."

However, if Armenia has borrowed so far, then in the future it will need to think about its repayment - in 2019-2020, will have to pay hundreds of millions on state debt. According to the State Debt Strategy for 2018-2020, in 2018 it is planned to allocate $ 666 million for debt, $ 710.7 million in 2019, and $ 1.37 billion for 2020. (at an estimated rate of 1USD/483.83AMD ) with GDP of about $ 10.5-11 billion.

In November 2016, Deputy Minister of Finance of Armenia Atom Janjughazyan told ArmInfo correspondent that from this sum $ 500mln is planned to be paid through such financial instrument as issue of Eurobonds. The government repaid ahead of schedule the loan taken from Russia for $ 500 million. The main underwriters were Deutsche Bank AG, London Branch, HSBC Bank plc and J.P.Morgan Securities plc. The second tranche of sovereign bonds worth $ 500 million for a period of 10 years and with a yield of 7.5% was issued by Armenia on March 19, 2015. Proceeds from the second issue of Eurobonds of $ 487 million. Part of the amount received from the sale of these bonds in the amount of $ 205 million went to purchase the first issue of bonds maturing 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.

April 26, acting Armenian Minister of Finance Vardan Aramyan recalled that international rating organizations Fitch and Moody's highly appreciated the efforts of the Armenian government for 2017 to ensure macroeconomic stability and improve fiscal discipline, on the basis of which the forecast estimate was raised from "stable" to " positive". On the statement of Serzh Sargsyan on April 23 about resignation the market calmed down, but then again felt the tension," he said.

Meanwhile, 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. Taking into account the real 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 was 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 national debt will grow to $ 7.2 billion and amount to 60% of GDP. At the end of March, the figure reached $ 6.  887.1 million