Monday, November 26 2018 12:53

ArmInfo. The Eurasian Fund for Stabilization and Development (EFSD) is ready to consider the Armenia's applications for programs on budget support for 2019-2020,  Tigran Kostanyan, acting director of the project group for financial  loans.

According to him, the Fund has a positive experience of working with  Armenia. Last year, a three-year program to support the state budget  of the country in the amount of $ 300 million was successfully  completed. "An evaluation of the implementation of this program will  be prepared in the near future, which will be submitted to the EFSD  Council for consideration," Tigran Kostanyan said, pointing out the  problematic situation with the debt sustainability of the country.  "The level of public debt approached its threshold values, which led  to an objective need to specify programs, including investment  programs, and this, in turn, led to the suspension of a sample of  funds, which is an objective response of the authorities aimed at  preventing growth of public debt. In the context, it is necessary to  consider adjustments in macroeconomic policy, rather than in terms of  freezing credit programs, "the project team leader noted, saying at  the same time that in support of state budgets for 2019-2020 the Fund  did not receive applications from Armenia. "But when they are  received by the EFSD, they will certainly be considered," Tigran  Kostanyan stressed.

Earlier in an interview with ArmInfo Atom Janjughazyan, RA Minister  of Finance, informed that starting from 2021 the Armenian government  intends to refuse external financial assistance in the form of budget  loans. According to Janjughazyan, the Ministry of Finance is making  efforts not to attract further loans for budget assistance. However,  in 2019 and 2020, the "Medium-Term Spending Program of Armenia for  2019-2021" provides for the attraction of these funds in order to  ensure financial stability. And, if in the current year Armenia plans  to attract $ 98.5 million through budget assistance programs, next  year, through this toolkit, $ 153.1 million will be received by the  state. As the chief financier of Armenia pointed out, today many  consider this tool to be quite attractive, since the budget support  loan differs from other types of borrowing in that it does not have a  program of specific targeted spending and is provided on concessional  terms.

Nevertheless, the financial authorities of Armenia believe that such  kind of soft loans are dangerous because the country can become  completely dependent on foreign borrowing. In addition, given the  fact that at present the structure of the economy and its "content"  has changed for the better, the country should gradually abandon  third-party budget assistance.

To recall, by the end of 2018, according to the law "On the State  Budget of Armenia for 2018", the state debt of Armenia should be  about $ 7.2 billion. According to forecasts laid down in the draft  budget for 2019, as of December 31, 2018, the public debt of Armenia  will make $ 7,053 million or 55% of GDP. On November 4, 2015, the  Government of Armenia and the Eurasian Development Bank signed an  agreement on the provision of a financial loan of $ 300 million. The  funds from the loan were intended to neutralize possible short-term  and medium-term risks in the implementation of foreign exchange  policy and to ensure the highest economic growth rates. The loan is  designed for 20 years, with a 10-year grace period at a rate of 2%  per annum.

The EFSD (the former EurAsEC Anti-Crisis Fund) is a regional  financial mechanism in the amount of $ 8.5 billion. In 2009, Armenia,  Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan founded it. In  particular, the fund provides financial loans to governments to  support the budgets or balance of payments of member states. The  Eurasian Development Bank (EDB) manages the funds of the EFSD. The  EDB is an international financial organization established by Russia  and Kazakhstan in January 2006 with the aim of promoting the  development of the market economy of the participating states, their  sustainable economic growth and the expansion of mutual trade and  economic ties. The Bank's member states are the Republic of Armenia,  the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz  Republic, the Russian Federation, and the Republic of Tajikistan.