Tuesday, February 18 2020 17:11
Alexandr Avanesov

Audit Chamber harshly criticized closed nature of Central Bank and  Ministry of Finance of Armenia

Audit Chamber harshly criticized closed nature of Central Bank and  Ministry of Finance of Armenia

ArmInfo. From 2012 to 2018, the state debt of Armenia increased by 342%. On February 18, Head of the Methodology, Analysis and International Relations Department of  the Audit Chamber of the Republic of Armenia Karen Arustamyan  announced this to the RA National Assembly Standing Committee on  Financial-Credit and Budgetary Affairs. 

The speaker noted that the audit was conducted for the first time,  and in the first stage, it covered the period from 2017 to 2018. The  work was carried out in accordance with the Law on the Audit Chamber,  in accordance with international standards ISSAI 100 and ISSAI 300  and the criteria of the World Bank. The purpose of the audit was to  assess the degree of effectiveness of public debt management.

Arustamyan reminded that Armenia is no longer listed as a poor  country, which implies a refusal to provide loans on favorable terms,  which, in turn, carries certain financial risks, especially  considering that 80% of the entire portfolio is debt in foreign  currency. There was practically no internal audit in the country,  which, meanwhile, should become one of the most important areas in  ensuring transparency in the management of public debt.

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.

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