Tuesday, February 18 2020 17:08

ArmInfo. The Ministry of Finance of Armenia is not going to defend itself in connection with the published results of the audit of public debt. On February 18,  head of the department Atom Janjughazyan stated this at a meeting on   the Standing Committee on Financial-Credit and Budgetary Affairs of  the National Assembly of the Republic of Armenia.

According to him, the Ministry is inclined to jointly search for  solutions to the application of effective public debt management  mechanisms, which will be in the range of $ 7.3 billion by the end of  the year. For this reason, the head of the Ministry of Finance  continued, interest in this area is obvious, and the issue should be  gradually solved so as not to create problems, and then heroically  overcome them. Systemic decisions are needed that can be made to meet  expectations.

The Minister conceded that companies with state participation  accumulated a certain share of debts, but it is equally important to  take into account loans attracted by companies from the public  regulation sector in this matter. Their debts are also a risk, since  the state must either raise tariffs or assist in managing these  risks.  He also emphasized that the government did not attach any  conceptual importance to the publication of an agency agreement  between the Ministry of Finance and the Central Bank, given the  neutral and independent nature of the Central Bank. However, now that  a new treaty is being prepared between the parties, the government is  prepared to consider its public domain. In general, as Janjughazyan  noted, of the 37 risks identified as a result of studies conducted by  the Audit Chamber, the state recognizes most of them.

To note, today the commission presented the results of the audit on  the effectiveness of public debt management. According to the head of  the Department of Methodology, Analysis and International Relations  of the Audit Chamber of the Republic of Armenia Karen Arustamyan,  from 2012 to 2018, the state debt of Armenia increased by 342%. There  is still no open publication of the agency agreement between the  Central Bank and the Ministry of Finance, although legislation  requires its publication. A strategic long-term program for managing  public debt is not presented to the Central Bank of the country,  which could be an important help in terms of clarifying the position  of the Central Bank on this issue. Nor was hedging of risks related  to public debt management. The issue of managing domestic public debt  remains a problem, the size of which in the share of the entire  public debt for a long period of time remains at the same level of  20%. Purchased by non-residents of government bonds is only 0.6% of  the total public debt. The quality of predictability of interest rate  payments continues to be low. The government often assumes  obligations to reduce the size of public debt, but in reality it is  different. For example, in 2017- 2018 the size of domestic public  debt increased by 28.5%. The issue of state guarantees remains open,  for which companies attracted credit resources. Information on this  issue is not available, as are data on sub- loans. Nor is an  electronic database of public debt management maintained. 

Earlier, ArmInfo reported that by the end of 2020, the state debt of Armenia will amount to 3.688 billion drams ($ 7.725 million) or 51.8%  of GDP. At the same time, the index to GDP will decrease by about 2  percentage points. According to the results of 2020, according to the  forecasts of the financial authorities of the republic, the state  debt of the Republic of Armenia will grow by $ 296 million or by 329  billion drams.  At the same time, external government debt will  increase by 31 billion drams or by $ 63 million - from 39.3% / GDP to  42% / GDP (against the actual for 2018 2.666 billion drams or $ 6.923  million, 44.6% of GDP), and growth domestic public debt will be 111  billion drams - up to 891 billion drams (from up to $ 1,639 billion  to $ 1, 871 billion) or from 11.99 GDP to 12.6% of GDP, against the  actual 672 billion drams or $ 1,390mln (11.2% of GDP) according to  the results of 2018.