ArmInfo.This January-June, Armenia's national debt increased by $706.2mln or 7.7% and reached $9, 931.8mln. Armenia's national debt in AMD terms decreased by AMD 374.3bln or 8.5%, amounting to AMD 4,055.3bln, mainly due to AMD appreciation against thee USD.
According to the RA Ministry of Finance, during the period under review, the government debt in USD terms increased from $8,767.9mln (AMD 4,209.8bln) at the end of 2021 to $9,389.9mln (a $622mln or 7.1% increase), decreasing to AMD 3, 834bln in AMD terms.
Armenia's foreign debt (the country's liabilities to international organizations, foreign states and funds received from Eurobond issues) decreased both in USD and AMD terms: in the former case, by $236.7mln (3.8%) or AMD 5,954mln and in the latter case, by AMD 541.3bln or by 18.2% - from AMD 2,972.4mln down to AMD 2, 431.1mln. During the period under review, the domestic debt increased by $858.7 mln or by 33.3% - from $2,577.2mln (AMD 1,237.4bln) to $3, 435.9 mln (AMD 1, 402.9 bln). The CBA`s debt increased by 18.4% or by $84.2 mln, from $457.7mln or AMD 219.8bln up to $541.9mln or AMD 221.3bln. Loans against government guarantees decreased from $101.4mln or AMD 48.7bln down to $92mln or AMD 37.6bln.
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 16.4% 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). This January-June, the financing of budget deficit from net borrowings totaled AMD 115.1bln (AMD 591bln in 2021, with the amount under the annual programme being AMD 354.9bln), with AMD 116.8bln due to internal resources. A total of AMD 96.9bln of the AMD 213.8bln budgeted for 2022 directed to serving the government debt (interest payments) (AMD 181.6bln in 2021).
In 2025, Armenia will have to direct nearly $1.6bln to pay off the government debt (except for the CBA's debt) accumulated by the end of June, 2022. In 2029, this amount will reach $1.4bln and in 2031, it is expected to exceed $1.5bln.
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 38.3%. The Asian Development Bank ranks second - 17%, followed by the IMF (8.8%), Eurasian Development Bank (7.6%) and European Investment Bank (2.7%). The share of external loans from the EU is 1.6%. As regards creditor-nations, Russia ranks first (7.8% share in Armenia`s national debt), Germany (5.5%), Japan (3.7%), France (3%), 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 rate is AMD 477.45/$1).
By December 31, 2022, the government debt is expected to go down to 4,741bln or 60.2% of GDP provided a 7% GDP growth is ensured (against AMD 4.275bln or 60.8% of the GDP forecast for the end of 2021).
This year, Armenia is expected to direct 10% of its budget expenditures or 2.7% of GDP to serve its national debt. The debt structure will be considerably improved, with a larger share of money debts and reduced currency 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%.
On June 30, in presenting the 2022-2025 draft programme of medium-term expenses and a 2022-2026 revised programme of debt reduction, Armenia's Minister of Finance Tigran Khachatryan stated that Armenia would reduce its government debt by the end of this year. Specifically, the government debt/GDP ratio is expected to be within 60% by December 31, 2022, against the budgeted 60.2%. The state budget will be financed due to its own revenues. As a result, the budget deficit/GDP ratio will be within the "safe" 3%.
