Armenia`s national debt in AMD terms down due to AMD appreciation 

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%.