ArmInfo. This January-May, Armenia's national debt increased by nearly $355mln and reached $9,580.5mln. By 2025, Armenia will have to spend up to $1.4bln to cover and serve the government debt accumulated by May 31, 2022, (the debt of the Central Bank of Armenia [CBA] not included). In 2029, this amount is expected to reach $3.1bln and in 2031, nearly $1.5bln.
According to the data by the RA Ministry of Finance, Armenia`s national debt reached AMD 4,429.6bln on December 31, 2021. As of the end of May, 2022, it showed a 2.8% decrease (by AMD 122.6bln), down to AMD 4,307bln (mostly due AMD exchange rate fluctuations).
During the period under review, the government debt in USD terms increased from $8,767.9mln to $9,075.4mln (a $307.4mln or 3.5% increase), against AMD 4,209.8bln by the end of last year, decreasing do AMD 4,079.9bln in AMD terms. Armenia`s foreign debt (the country`s liabilities to international organizations, foreign states and funds received from Eurobond issues) increased by $162.9mln (2.6%) or 6,027.8mln, decreasing by AMD 262.5bln or by 8.8% - from AMD 2,972.4mln down to AMD 2,709.9mln.
During the period under review, the domestic debt increased by $470.3mln or by 18.2% - from $2,577.2mln (AMD 1,237.4bln) to $3,047.5mln (AMD (1,370.1bln). The CBA`s debt increased by 10.3% or by $47.4mln and totaled $505.1mln or AMD 227.1bln (against $457.7mln or AMD 219.8bln). Loans against government guarantees decreased from $101.4mln or AMD 48.7bln down to $97.7mln or AMD 483.9bln.
As of the end of May 2022, the share of domestic debt in the government debt increased from 29.4% at the end of 2021 up to 33.6% (25.4% by the end of 2020), with the AMD debt increasing from 28.28% up to 32.5% (24.2%). Only 17% of the government debt was at a fixed rate (17.1% at the end of 2021).
Who and how much
Last year, Armenia's national debt increased by $1,257.2mln (with the AMD/USD exchange rate being AMD 495.37/$1) - from $7,968.5mln to $9,225.6mln (AMD 4,429.6mln). Armenia`s borrowings totaled $6.8bln during its 28-year-long independence. This January-May, the financing of budget deficit from net borrowings totaled AMD 91.8bln (AMD 591bln in 2021, with the amount under the annual programme being AMD 354.9bln), with AMD 89.2bln due to internal resources. A total of AMD 95.3bln of the AMD 213.8bln budgeted for 2022 directed to serving the government debt (interest payments) (AMD 181.6bln in 2021).
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 38.1%. The Asian Development Bank ranks second - 16.9%, followed by the IMF (8.9%), Eurasian Development Bank (7.5%) and European Investment Bank (2.8%). The share of external loans from the EU is 1.6%.
As regards creditor-nations, Russia ranks first (7.7% share in Armenia`s national debt), Germany (5.7%), Japan (3.9%), France (3.1%), 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 4,986ln or 63.4% of GDP by December 31, 2022 (the expected AMD/USD exchange is AMD 477.45/$1).
Under the Annual Foreign Borrowings Programme, in 2022, Armenia plans to borrow AMD 227.8bln or $477 (the expected AMD/USD exchange is AMD 477.45/$1).
By December 31, 2022, is to expected to go down to 4,741bln or 60.2% of GDP provided 7% GDP growth is ensured (against AMD 4.275bln or 60.8% of the GDP forecast for 2021).
This 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.
This year, the average weighted interest rate on the government debt is expected to be 5% against 4.6% last 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. By the end of 2022, 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%.
