Thursday, April 14 2022 17:13

ArmInfo.In Q12022, Armenia increased its public debt by almost $131 million - up to $9 billion 356.6 million or 4 trillion 569.3 billion drams. According to the  2022 Annual Borrowing Plan Armenia plans to attract 227.8 billion  drams or $477 million (the estimated exchange rate of the US dollar  to the Armenian dram is 477.45).

Thus, according to the data of the Ministry of Finance of the  Republic of Armenia, in January-March 2022, the government debt from  $8 billion 767.9 million (4 trillion 209.8 billion drams - by the end  of 2021) increased by $115.1 million or 1.3% - up to $8 billion 883  million (4 trillion 332.9 billion drams). At the same time, the  increase in external debt (Armenia's debt obligations to  international organizations and foreign states, funds received from  the issue of Eurobonds) in dollar terms amounted to $19 million  (0.3%) - 6 billion 171.7 million, and in AMD it increased by 38  billion drams - from 2 trillion 969.7 billion drams to 3 trillion  010.4 billion drams. Domestic debt increased by $134 million (by  5.2%) - from $2 billion 583 million (1 trillion 240.2 billion drams)  to $2 billion 711.3 million (1 trillion 322.5 billion drams). The  debt of the Central Bank increased by 3.5% or $15.9 million - from  $457.7 million or 219.8 billion drams to $473.6 million (231 billion  drams). The amount of loans issued under government guarantees  decreased from $101.4 million or 48.7 billion drams to $99.5 million  or 48.5 billion drams.

By the end of March 2022, the share of domestic debt in government  debt increased from 29.4% in 2021 to 30.5% (25.4% in 2020), while AMD  debt increased from 28.28% (24.2% by the end of 2020) to 29.9%.

In 2025, Armenia will have to allocate about $1.1 billion for the  government debt repayment and service (excluding the debt of the  Central Bank of the Republic of Armenia), formed by March 31, 2021,  in 2029 the amount will be more than $1 billion, and in 2031 already  almost $1.3 billion. 17.6% of government debt borrowings are  attracted at a floating interest rate (17.1% - by the end of 2021).

To whom do we owe and how much?

In 2021, the public debt of Armenia increased by $1.257.2 billion  (the estimated exchange rate of the Armenian dram against the US  dollar was 495.37 drams) - from $7 billion 968.5 million to $9  billion 225.6 million (4 trillion 429, 6 billion drams). At the same  time, over the 28-year history (since Armenia gained independence),  the RA has attracted loans in the amount of about $6.8 billion.

In January 2022 alone, the volume of financing the budget deficit  through net borrowing amounted to 88.8 billion drams (591 billion  drams for the entire year 2021), 39.2 billion drams were allocated to  pay interest rates on the government debt (181.6 billion drams in  2021).

Armenia's largest creditor is currently the World Bank - the share of  the International Bank for Reconstruction and Development and the  International Development Association accounts for 38% of the state  debt of the Republic of Armenia. The second major creditor is the  Asian Development Bank - 16.9%, the International Monetary Fund is in  third place - 8.9%, followed by the Eurasian Development Bank with  7.3% and the European Investment Bank - 2.7%. External loans from the  EU in the structure of public debt amounted to 1.6%.

Among the major creditor countries of Armenia, Russia is in first  place - 7.6%, Germany - 5.8%, Japan - 4%, France - 3.2%, China -  0.5%, and the USA - 0.3%, the share of the Abu Dhabi Development Fund  accounts for 0.1%.

Forecasts of financial authorities on public debt

Recently, during the presentation of the report on the activities of  the government for 2021, Minister of Finance of Armenia Tigran  Khachatryan stated that, despite possible negative scenarios for tax  revenues to the state budget due to the turbulence of the global  economy, the RA authorities do not plan to reduce state treasury  spending. If necessary, the republic will go to increase the debt  burden, but all the expenditure items will be done," he said.

Thus, according to the approved law on the state budget for 2022, by  the end of this year, the public debt will amount to 4 trillion 986  billion drams, or 63.4% of GDP (the estimated exchange rate of the  Armenian dram to the dollar is 477.45 drams). On December 31, 2022,  under the conditions of ensuring 7% economic growth, the government  debt will will reach up to 60.2% of GDP - to 4 trillion 741 billion  drams, from 4 trillion 275 billion drams or 60.8% of GDP expected by  the financial authorities by the end of 2021. In 2022, Armenia will  allocate about 10% of all state budget expenditures or 2.7% of GDP  only to service the government debt. In particular, 517.2 billion  drams (about $1.048 billion) will be required for the service and  repayment of government debt, of which 302.8 billion drams (about  $613 million) will be debt repayments, and 214.4 billion drams will  be interest payments (about $434 million against 185.5 billion drams  this year). In 2022, the weighted average interest rate on government  debt will be 5%, instead of 4.6% in 2021. However, the debt structure  will be significantly improved, with an increase in the share of cash  indebtedness and a decrease in foreign exchange risks. In particular,  in 2021-2022, it is planned to increase the share of government  treasury bonds in drams in the structure of public debt, which,  according to forecasts, will be 3.8% and 2.8%, respectively. At the  end of 2022, the share of domestic debt will increase by 2.5% - up to  31.5%, and AMD debt - from 28.3% to 31%.