ArmInfo. In August 2019, for the first time since 2015, a tendency towards a decrease in the external public debt of Armenia was recorded. Armenian Prime Minister Nikol Pashinyan wrote about this on his Facebook page on September 11.
According to Pashinyan, the reduction of the external public debt is not an end in itself. "This is the result of the fact that we set ourselves the task of efficiently spending state funds," the prime minister said. At the same time, according to the head of government, this policy in a certain way slows down the pace of capital investments, since "the system is used to working according to different old rules." "However, this path, unequivocally is right - not to allow state funds to be spent on poor-quality construction and kickbacks," Nikol Pashinyan said.
To recall, a month earlier, the former Prime Minister of Armenia, economist Hrant Bagratyan, referring to the policy of the financial authorities of the Republic of Armenia, called it unjustified, predicting the aggravation of budgetary problems since 2020. "For the economy, low inflation is very problematic. In conditions of low inflation and the long rise in price of the national currency, one should not expect investments," the economist warns.
Consumption is almost equal to GDP, he noted. The expert believes that all of this is facilitated by an incomprehensible government policy on the issue of external public debt. "What is the reason for reducing it (public debt- Ed. note) if since August 14, 2019 for the first time in the history of mankind, the interest rate of 10-year bonds is lower than 2-year bonds. In ten developed countries, the interest rate set by the Central Bank is lower or equal to zero. Neither the US nor the EU have any other way to stimulate the economy than to distribute resources for free. In these conditions, our people decided not to borrow anymore, "Bagratyan says. Meanwhile, the expert believes that the Armenian authorities could pay off old debts at high interest rates with new, more profitable borrowings, attracting funds, and direct them to capital investments, and not for repairs and consumer spending.
According to the Ministry of Finance of Armenia, the state debt of Armenia by the end of July 2019 from $ 6.923 million (as of December 31, 2018) increased by $ 62 million, reaching $ 6.985 million. Government debt increased by $ 98mln to $ 6.471mln, while the Central Bank's debt, on the contrary, decreased by approximately $ 37mln to $ 513mln. Meanwhile, according to the approved state budget for 2019, this year Armenia will increase government debt by $ 512mln, of which $ 21 million from the Central Bank. On August 5, the Armenian government reported that for the first time since 2015, the country has seen a tendency to reduce government debt. Over the past almost 1.5 years, it has decreased by $ 120 million, or 2.1%. As a result, according to the same Ministry of Finance, for the first half of this year the indicator of foreign credit programs reached about 30%. As international financial institutions have repeatedly stated, the inadequate implementation of capital investments has become a serious problem for Armenia.