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%.
