ArmInfo. In 2022, Armenia's public debt will increase by 482 billion drams and reach 4 trillion 991 billion drams (63.4% of GDP), from 4 trillion 509 billion drams or 64.1% of GDP expected by the end of 2021. Armenia's Minister of Finance Tigran Khachatryan stated this in the parliament on October 25, presenting the draft budget for next year.
So, according to the forecasts laid down in the basis of the state budget, by December 31, 2022, the government debt will decrease by 0.6 percentage points and amount to 4.740 billion drams and 60.2% of GDP (about $ 9.603 billion). By the end of this year, the financial authorities expect the indicator to increase to 4.274 billion drams (about ($ 8.656 billion) and 60.8% of GDP. Thus, the increase will be about $ 947 million (the estimated exchange rate of the Armenian dram to the dollar is 493.6 drams).
In 2021-2022, it is planned to increase the share of government treasury bonds in drams in the structure of government debt, which, according to forecasts, will be 2.9% and 2.8%, respectively. At the end of 2022, the share of domestic debt will increase by 2.4% to 30.7%.
At the same time, the deficit of the state treasury is planned to be reduced by about 99 billion drams or by 29% - to 243 billion drams or 3.1% of GDP. The budget deficit will be financed from both domestic and foreign loans - 285.2 billion drams and 42.2 billion drams, respectively.
In 2022, the weighted average interest rate on government debt will be 5%, up from 4.6% in 2021. The expenses on government debt service (interest payments) will amount to 2.7% of GDP. In 2022, 517.2 billion drams (about $ 1.048 billion) will be required to service and repay government debt, of which 302.8 billion drams (about $ 613 million) will be debt repayments, and 214.4 billion drams - interest payments (about $ 434 million or 2.1% of GDP against 185.5 billion drams this year).
The head of the Ministry of Finance recalled that the country's fiscal rules allow the growth of government debt up to 60% of GDP, and if the rules are violated, they oblige the Armenian government to submit a draft macro and fiscal measures that will allow the republic to return to 60% within the next 5 years. Meanwhile, if the ratio of government debt to GDP by the end of 2019 was 49.9%, then by the end of 2020, due to the pandemic and the war in Artsakh, Armenia was forced "to cross the Rubicon", increasing the indicator to 63.5% of GDP. Nevertheless, according to the financial authorities of Armenia, the fiscal policy of Armenia for 2021-2026, focused on stimulating economic growth (at least in the amount of 7%, and in the presence of favorable external conditions - all 9%), by improving tax administration, will also lead to an increase in the ratio of taxes to GDP by 0.9% p.p. And as a result of fiscal consolidation on government debt, the authorities promise not only to return to permissible limits by 2026, but also to reach the mark of 54% of GDP.
It should be noted that according to the data of the Ministry of Finance of the Republic of Armenia, for 9 months of 2021, the state debt of Armenia increased by $ 1.069 billion, reaching the level of $ 9.038.1 billion 973 million. In 2025, for the repayment and servicing of the government debt (excluding the debt of the Central Bank of Armenia), formed at the end of September 2021, Armenia will have to allocate almost $ 1.4 billion. At the same time, over its 28-year history (since Armenia gained independence), the RA has attracted borrowings in the amount of about $ 6.8 billion, and over the past three years "managed" to increase the national debt by $ 2 billion 106 million. In January-September 2021, the government debt increased from $ 7 billion 508.5 million (by the end of 2020) to $ 8 billion 564.5 million - by about $ 1 billion 056 million or 14.1%.
At present, the largest creditor of Armenia is the World Bank: the share of the International Bank for Reconstruction and Development and the International Development Association account for 38.8% of the state debt of the Republic of Armenia. The second major creditor is the Asian Development Bank - 16.9%, the third place is held by the International Monetary Fund - 7.6%, followed by the Eurasian Development Bank with 7.2%. Among the large creditor countries of Armenia, the first place is taken by the Russian Federation - 7.2%, Germany - 6%, France - 3.1%, Japan - 4.5%, China - 0.5%, the USA - 0.3% and ythe share of the Development Bank of Abu Dhabi is 0.1%.
