ArmInfo. In January-July 2022, Armenia's public debt increased by almost 7.7% or $706.2 million - up to $9 billion 974 million. At the same time, as a result of the revaluation of the national currency against the US dollar, the public debt in dram terms decreased by 8.2% or 363.1 billion drams - up to 4 trillion 067 billion drams.
According to the data of the Ministry of Finance of the Republic of Armenia, during the reporting period, the government debt in US currency increased by $659.2 million, or by 7.5% - from $8 billion 767.9 million (4 trillion 209.8 billion drams - by the end of 2021) - to $9 billion 427.1 million, and in dram again decreased by 366.3 billion drams or 8.7% - up to 3 trillion 834.5 billion drams.
External debt (Armenia's debt obligations to international organizations and foreign states, funds received from the issue of Eurobonds) decreased both in dollar and dram terms: in dollar case, by $336.7 million (5.4%) - up to 5 billion 854 million, in the dram case- by 585.7 billion drams or 19.7% - from 2 trillion 972.4 billion drams to 2 trillion 386.7 billion drams.
Domestic debt increased by $95.9 million (by 38.6%) - from $2 billion 577.2 million (1 trillion 237.4 billion drams) to $3 billion 573.1 million (1 trillion 456.8 billion drams).
The debt of the Central Bank increased by 19.5% or $89.3 million - from $457.7 million or 219.8 billion drams to $547 million (223 billion drams). The amount of loans issued under government guarantees decreased from $101.4 million or 48.7 billion drams to $89.7 million or 36.6 billion drams.
By the end of July 2022, the share of domestic debt in government debt increased from 29.4% at the end of 2021 to 37.9% (25.4% at the end of 2020), while AMD debt increased from 28.28% (24.2% at the end of 2020) up to 36.13%. Only 16.2% of government debt was attracted at a fixed interest rate (17.1% at the end of 2021).
How much will the national debt cost?
In the first 7 months of 2022, the volume of financing the budget deficit through net borrowing amounted to 136.2 billion drams (591 billion drams for the whole of 2021, and the y-o-y program for this year is 354.9 billion drams), of which 144 billion drams - due to domestic sources. 104.4 billion drams out of 213.8 billion drams planned for the whole of 2022 (181.6 billion drams for 2021) were allocated to service the government debt (payment of interest rates).
According to the government debt repayment schedule until 2054, in 2023, Armenia will have to allocate a little more than $1 billion to repay and service the government debt (excluding the debt of the Central Bank of the Republic of Armenia), formed by July 31, 2022; about $1 .1 billion in 2024, almost $1.6 billion in 2025, the amount in 2029 will be about $1.4 billion, and more than $1.6 billion in 2031.
Armenia's creditors
The World Bank remains the largest creditor (foreign loans) of Armenia - the share of the International Bank for Reconstruction and Development and the International Development Association accounts for 38.3% of the state debt of the Republic of Armenia. The second largest creditor is the Asian Development Bank - 17%, the International Monetary Fund is in third place - 8.8%, followed by the Eurasian Development Bank with 7.7% and the European Investment Bank - 2.7%. External loans from the EU in the terms of external debt amounted to 1.6%.
The Russian Federation is in first place among the major creditor countries of Armenia - 7.7%, Germany - 5.4%, Japan - 3.8%, France - 3%, China - 0.5%, and the USA - 0.3%, the share of the Abu Dhabi Development Fund of external public debt accounts for 0.1%.
Forecasts of financial authorities
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). The government debt will reach by December 31, 2022 in the conditions of ensuring 7% economic growth will decrease 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 of the year. In 2022, Armenia will allocate about 10% of all state budget expenditures or 2.7% of GDP to service the government debt alone. The debt structure will be significantly improved, the share of cash debt will increase and currency risks will decrease. In particular, in 2021-2022, it is planned to increase the share of government treasury bonds in drams in therms 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%.
On June 30, presenting the draft Medium-Term Expenditure Program for 2022-2025 and the revised Debt Reduction Program for 2022-2026 in the government, Armenian Finance Minister Tigran Khachatryan said that by the end of this year, Armenia will be able to reduce the level of government debt much faster than planned. Thus, the ratio of government debt to GDP by December 31 will not exceed 60%, against 60.2% planned by the state budget. In 2022, state treasury expenses will be financed more from their own revenues. As a result, the size of the deficit in relation to GDP will not exceed the "safe level" of 3%.
