Tuesday, June 1 2021 17:32

ArmInfo. The Central Bank of Armenia attaches importance to pursuing a countercyclical (stabilization) policy in the current economic situation to mitigate  negative consequences and maintain macroeconomic balance. On June 1,  Governor of the Central Bank of the Republic of Armenia Martin  Galstyan stated this in the parliament during the preliminary  discussions of the annual report on the implementation of the 2020  state budget.

M. Galstyan noted that in this context, the Central Bank considers it  a priority in the coming years, through continuous implementation of  fiscal adjustments, to stabilize the state debt at the level  envisaged in the medium-term program and to consolidate the solid  foundations of sustainable economic development.

He noted that government debt increased by 13% in 2020 - to 63.5% of  GDP, exceeding the threshold of 60% set by the state budget.  "Moreover, in the structure of the state debt, the share of domestic  debt continued to increase, and it is noteworthy that this was  accompanied by a decrease in interest rates, which was facilitated by  an expansive monetary policy," he noted.

M. Galstyan stressed that the effective correlation of expansionary  fiscal and monetary policies in 2020 made it possible to ensure  macroeconomic stability. This is a very important achievement given  the challenges of 2020 and the magnitude of their implications. At  the same time, fiscal policy, as in the rest of the world, in order  to quickly respond to the socio-economic problems caused by the  pandemic, was implemented in Armenia by a significant increase in  public debt, with a deviation from the level outlined in the medium  and long-term programs.

He also added that the Central Bank attaches importance to the  introduction and further improvement of the public investment  regulation system in order to increase the long-term economic  efficiency of capital expenditures.

It should be noted that according to the March forecast of the World  Bank, the national debt of Armenia will grow in 2021 to 70.8% of GDP,  with a slight decrease in 2022 to 70.6% of GDP, with the GDP growth  projected by the World Bank for these years by 3.4% in 2021 with an  acceleration to 4.3% in 2022.

According to the May forecast of the IMF, the gross external debt of  Armenia, which already in 2020 exceeded the volume of GDP to 103.5%,  will continue to prevail over GDP both in 2021 (107%) and in 2021  (105.1%). In particular, according to the IMF forecast, the gross  debt of the Armenian government will reach 69.9% of GDP in 2021, and  then in 2022 it will modestly decrease to 68.8% of GDP. And this is  despite the 1% GDP growth projected by the IMF in 2021, with an  acceleration in 2022 to 3.5%.  According to the Statistical Committee  of the Republic of Armenia, the decline in Armenia's GDP amounted to  7.4% in 2020 - to 6.182 trillion drams, against 7.6% growth in 2019.  The state debt of Armenia grew in 2020 by 8.8% to $ 7.97 billion, as  a result of an increase in both external debt by 4.6% to $ 6.05  billion and domestic debt by 24.6% to $ 1.92 billion