Wednesday, November 6 2019 12:48
Naira Badalian

Armenian Ministry of Finance: Government debt is sustainable and  manageable

Armenian Ministry of Finance: Government debt is sustainable and  manageable

ArmInfo. The Ministry of Finance of Armenia published a working document that analyzed the government debt and debt sustainability of the Republic of Armenia  for 2019. As part of the document, specialists from the Department of  Macroeconomic Policy and the Department of Public Debt Management of  the Ministry of Finance conducted a multilateral assessment of debt  sustainability and analyzed possible risks.

The results of the analysis show that, in general, government debt is  sustainable and manageable. In this matter, as indicated by the  Ministry of Finance, the key role is played by the policy to reduce  the debt burden, which is based on the new system of fiscal rules.

"According to the internationally recognized methodology developed by  the International Monetary Fund and the World Bank, Armenia is  considered a country with a low level of debt," the Finance Ministry  said.

The share of government debt in foreign currency and the debt of  non-residents in the structure of government debt is estimated to be  risky, but at the same time managed. "The implementation of measures  outlined by strategic documents on the fiscal policy of the Republic  of Armenia will assist in mitigating the risks associated with debt  sustainability," the document says.  You can familiarize yourself  with the document by clicking on the link -  http://www.minfin.am/website/images/files/DSA_MoF_2019_last.pdf?fbclid=IwAR0tHBOxbJ  gLn0KBymb8DvdiIHw1NSKY8reOxAmLxQLDYfRDabfiabr

It should be noted that from 2009 to 2014, Armenia steadily increased  its state debt by an average of about $ 245 million: in 2009, as of  December 31, the state debt amounted to $ 3, 367.2 million, in 2010 -  $ 3, 805.1 million. (an increase of $ 437.9 million), in 2011 - $  4.134.7 million (with an increase of $ 329.6 million), in 2012 - $ 4,  372.1 million. (an increase of $ 237.4 million), in 2013 - $ 4,588.5  million. (an increase of $ 216.5 million), in 2014 - $ 4.441.5  million. (an increase of 248.3 billion drams, and in dollar terms a  decline of $ 147 million). As early as 2015, the indicator began to  grow by leaps and bounds - by the end of 2015 it had reached the  level of $ 5077.7 million, while fixing an increase of $ 636.2  million. The trend continued in 2016, ensuring growth by As a result,  the indicator reached $ 5,942.1 million. By the end of 2017, the  total public debt of Armenia increased to $ 6.774.6 million, instead  of the figure of $ 6.512 billion laid down in Budget 2017. Thus, over  the year, increasing $ 832.5 million debt burden Armenia accumulated  $ 262.6 million more than planned. "Flight" of public debt was  stopped in 2018 - by the end of the year, the state debt of Armenia  amounted to $ 6,922.9 million, having increased over the year by $  148.3 million instead of the planned $ 372 million. And, if from 2009  to 2016 on average 4.2% of state treasury expenses were directed to  pay interest payments, then in 2017, the indicator increased to 8.1%.  In 2018, 139 billion drams were allocated for interest payments  (instead of the actual ones for 2017, 122.1 billion drams), namely 75  billion drams for external debt and 64 billion drams for domestic  debt.

According to the forecasts laid down in the basis of the draft law  "On Public Debt for 2020", the state debt of Armenia by December 31,  2019 will amount to 3.538 trillion drams ($ 7.430 billion) or 53.9%  of GDP. At the end of 2020, the indicator will reach 3.705 trillion  drams ($ 7.780 billion), or 52.2% of GDP. At the same time, by  December 31, 2020, government debt will amount to 3.490 trillion  drams ($ 7.330 billion) or 49.2% of GDP, thus decreasing by 1.1  percentage points from the expected by the end of 2019 3.305 trillion  drams ($ 6.940 billion) or 50, 3% of GDP. In 2019, according to the  indicators laid down in the approved budget, Armenia will direct  about 356.9 billion drams ($ 733 million), or 9.6% of the state  treasury expenses, to repay and service the government debt. In  particular, out of 356.9 billion drams, 198.9 billion drams were  planned to be allocated for paying off the main amount of the debt  (85.2 billion drams for external debt and 113.7 billion drams for  domestic debt), and 158 billion drams for paying interest payments .

As a result, according to the document, the repayment and servicing  of the government debt of Armenia in the next year will require 453.9  billion drams (about 953.5 million), not counting the $ 402 million  that the republic was supposed to send to repay the first tranche of  Eurobonds, scheduled for 30 September 2020 The financial authorities  have already decided the issue by issuing the third tranche of  Armenian sovereign securities.

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