Wednesday, December 15 2021 17:17

ArmInfo. This January-October, Armenia`s national debt increased by $1.191bln (AMD 4,450bln) and reached $9.159.3bln. By 2025, Armenia will have to spend a up to $1.4bln to cover and serve the government debt (the debt of the Central Bank of  Armenia [CBA] not included). 

According to the data by the RA Ministry of Finance, Armenia`s  national debt increased by $1,190.8mln (14,9%) - from $7,968.5mln on  December 31, 2020, to November 30, 2021 (the AMDUSD exchange rate  was AMD 485.86$1). According to the 2021 draft budget, Armenia`s  national debt was to reach AMD 4,461bln ($9.035bln or 69.8% of GDP,  on condition of 3.2% GDP growth). However, according to the 2022  draft budget, Armenia`s national debt is to reach AMD 4,551bln or  64.2% of GDP, on condition of 6.5% GDP growth), with the AMDUSD  exchange rate being AMD 477.45$1. Thus, the upward trend is most  likely to continue until the end of the year. 

Armenia`s borrowings totaled $6.8bln during its 28-year-long  independence, with $2.3bln borrowings recorded during the last three  years. By the end of 217, Armenia`s national debt had totaled  $6.774bln. By April 2018, it had totaled $6.867bln, by the end of  2018, Armenia`s national debt had totaled $6.922bln, by the end of  2019, $7.321bln. by the end of 2020, Armenia`s national debt had  increased by another $647bln and reached $7.968bln,  with the  government`s debt totaling $7.509bln (internal debt, $5.593bln and  external debt $1.915bln).

Thin January-November, 2021, the government`s debt increased by about  ?? $1,184.5mln or by 15.8% - from $7,508.5mln at the end of 2020 to  $8.693bln. Armenia`s foreign debt (the country`s liabilities to  international organizations, foreign states and funds received from  Eurobond issues) increased by $584.8mln or by 10.4% - from  $5,599.5mln to $6,184.3mln. Specifically, on January 26, 2021,  Armenia distributed among international investors the 4th issue of  10-year debt securities to the amount of $750mln.  The annual yield  of the bonds of the 4th issues was 3.875% against the 4.625% annual  yield of the 3rd issue. 

During the period under review, the domestic debt increased by about  $599.6mln or by 31.4% - from $1.909bln to $2,508.7mln. The CBA`s debt  increased by 1.4% or by $6.3 and totaled $466.3mln (against $459.9mln  by the end of last year). Loans against government guarantees totaled  $107mln. 

Words pay no debts

This January-October, a total of AMD 177.9bln were directed to pay  interest rates on the government debt.  

The World Bank is Armenia`s major creditor, - the share of the  International Bank for Reconstruction and Development and  International Development Association in Armenia`s national debt  being 38.4%. The Asian Development Bank ranks second - 16.9%,  followed by the IMF (7.5%), Eurasian Development Bank (7.2%) and  European Investment Bank (2.8%). The share of external loans from the  EU is 1.6%.    

As regards creditor-nations, Russia ranks first (8% share in  Armenia`s national debt), Germany (5.9%), Japan (4.4%), France  (3.2%), China (0.5%), the USA (0.3%), and Abu Dhabi Fund for  Development (0.1%). 

Forecast by financial authorities

According to the approved 2022 draft budget, Armenia`s national debt  is to reach AMD 4,511bln or 64.2% of GDP by December 31, 2021, and  AMD 4,986bln or 63.4% of GDP by the end of 2022 (the expected AMDUSD  exchange is AMD 477.45$1). The government debt is expected to reach  AMD 4,275bln or 60.8% of GDP. By December 31, 2022, is to expected to  go down to 4,741bln or 60.2% of GDP provided 7% GDP growth is  ensured. 

Next year, Armenia is expected to direct 10% of its budget  expenditures or 2.7% of GDP to serve its national debt. A total of  AMD 517.2bln (about $1.048bln) is required for this purpose, with a  total of AMD 302.8bln (about $613mln) required for the principal sum  and AMD 214.4bln (about $434mln) for the interests (against AMD  185.5bln this year). 

Next year, the average weighted interest rate on the government debt  is expected to be 2% against 4.6% this year. However, a much better  debt structure is expected, with increase money obligations and  reduced inflation risks. In 2021-2022, the share of AMD government  treasury bonds in the government debt is expected to reach 3.8% and  2.8% respectively. Next year, the share of internal debt is expected  to increase by 2.5% and reach 31.5%, with the AMD debt to increase  from 28.3% to 31%.