ArmInfo.This January-September 2022, Armenia's national debt increased by AMD $705.9 or by 7.7%, up to $9,963.6mln. AMD appreciation (15% USD depreciation against the AMD this January-September - AMD 480/$1 to 405/$1) caused a 9% decrease in Armenia's national debt or by AMD 398.1bln, down to AMD 4,031.5bln.
During the period under review, the Armenian government's debt increased by $630mln or by 7.2%, up to $8, 67.9mln (AMD 4, 209.8bln by the end of 2021), up to $9,397.9mln, simultaneously decreasing by AMD 394.9bln or by 9.4%, down to AMD 3, 814.9bln. In 2022, the budgeted AMD/USD exchange rate is AMD 477.45/$1.
Armenia's foreign debt (Armenia's debt to international organizations and other states, funds received from Eurobond issue) decreased both in USD and AMD terms: by $577.4mln (9.3%), down to $5.613bln and by AMD 693.8bln (23.3%), from AMD 2,972.4bln down to AMD 2,278.6bln.
Armenia's domestic debt increased by $1,207.4mln (46.8%) or AMD 298.8bln (24.2%), from $2,577.2mln (AMD 1, 237.4bln), down to $3,784.6mln (AMD 1,536.3bln).
The Central Bank's debt increased by 16.6% or by $75.9, from $457.7 or AMD 219.8bln (a 1.4% increase), up to $533.6mln or AMD 216.6bln. Loans issued against the government guarantees decreased from $101.4mln or AMD 48.7bln down to $87.1 or AMD 35.3bln.
By the end of this September, the share of domestic debt in Armenia's national debt increased from 29.4% at the end of 2021 up to 40.3% (25.4% by the end of 2020), with the AMD debt from 28.28% (24.2% by the end of 2020) up to 37.1%. The share of the government debt borrowed at a fixed interest rate is 16.2% (17.1% by the end of 2021).
Words pay no debts
This January-September, the budget deficit due to net borrowings totaled AMD 161.6bln (591bln last year, with AMD 351.9bln under 2022 annual programme totaling). A total of AMD 172.2bln have been attracted from internal sources (placement of government treasury bonds), with AMD 250.2bln annual programme, with AMD 10.6bln attracted from external sources (AMD 101.7bln annual programme).
A total of AMD 132.2bln have been allocated to serve the government debt of the budgeted AMD 213.7bln (AMD 181.6bln last year).
According to the debt repayment schedule until 2054, next year Armenia is to allocate around $1.1bln to serve the national debt (without the CBA's debt) formed by the end of 2022, in 2024, a little more than $1.1bln, in 2025, over $1.6bln, in 2029, around $1.4bln, in 2031, over $1.6bln.
As of September 30, 2022, the unclaimed balance of the government debt totaled $4,152.5mln ($4,481.1mln of December 31.12.2021).
Creditors of Armenia
The World Bank remains Armenia's major creditor of Armenia (foreign loans): the share of the International Bank for Reconstruction and Development and International Association in Armenia's national debt is 38.3%. The share of Asian Development Bank (ADB) is 17.5%, followed by that of the International Monetary Fund (IMF) (8.7%), Eurasian Development Bank (8%), European Investment Bank (1.5%), International Fund for Agricultural Development (IFAD) (1.3%), OPEC (1%), EBRD (0.6%).
As to countries, among the major creditors are Russia (7.7%), Germany (KFW) (5.3%), Japan (3.5%), France (2.9%), China (0.4%), and the USA (0.3%). The share of the Abu Dhabi Fund for Development is (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%.
