Specific debt burden per capita in Armenia continues to grow rapidly,  approaching $4.000

ArmInfo. In Armenia, the specific debt burden per capita continues to grow at a double-digit pace  (16%), reaching $3.7 thousand by April 1, 2023 from $3.2 thousand a  year earlier, with growth accelerating from 10.3% to 16%.

Moreover, the per capita debt burden from external debt is slowly decreasing -  from $2.2 thousand to $2.1 thousand, and from internal debt it has  accelerated in growth - from $916 to $1.5 thousand. This is against  the backdrop of an increase in the population of Armenia by 19.6  thousand people over the year, up to 2.981 million people by April 1,  2023, while a year earlier, the growth in the per capita debt burden  by 10.3% was accompanied by a decline in the population by 2.3  thousand people.

Such an increase in the population of Armenia is more likely due to  the arrival of resettlers, including many Armenians from the Russian  Federation, rather than from natural population growth. This is  confirmed by the data of the strategy development department of the  RA Commissioner for Diaspora Affairs, according to which in 2022  alone, over 25,000 people applied for citizenship of the Republic of  Armenia and this is the highest figure since 1991. As a comparison,  over the previous four years in 2018-2021, about 40,000 Diaspora  Armenians received citizenship of the Republic of Armenia. And as  long as the influx of immigrants continues, and the majority of  migrants who arrived earlier as have long-term plans with Armenia, it  can be assumed with a high probability that the growth in the per  capita debt burden will continue to be accompanied by an increase in  the country's population.

The degree of foreign debt coverage by gold and foreign exchange  reserves creased to 58.2% by April 1, 2023, from 44.2% last year,  against the backdrop of a y-o-y increase in reserves by 26.7% with a  decline in external debt by 4.5%. As a comparison, we note that a  year earlier, on this date, external debt and reserves showed a  miserable decline - by 1% and 2%, respectively.

According to the preliminary data of the Ministry of Finance of the  Republic of Armenia, published by the Statistical Committee, by April  1, 2023, Armenia's public debt amounted to $10.899 billion (4.232  trillion drams), accelerating the y-o-y growth to 16% from 8% a year  earlier. This is due to the continuing decline in external debt, with  an accelerated growth in domestic debt. In particular, external debt  accelerated the y- o-y decline from 1% to 4.5%, amounting to $6.4  billion (2.5 trillion drams), while domestic debt accelerated growth  from 42.1% to 66.7%, reaching $4.5 billion (1.7 trillion drams) . In  Q1 2023 alone, the public debt grew by only 2.5%, as a result of the  0.8% decrease in external debt, while the growth of domestic debt  accelerated to 7.5%, at the same time a year earlier in the same  quarter, there was a meager growth in public debt - by 1.4%, which  was accompanied by a decline in external debt by 0.1%, while the  growth of domestic debt accelerated to 5.2%.

The share of the Government's debt in the external debt in Q1 2023,  decreased to 91.2% from 92.9% a year earlier, while the share of the  Central Bank increased to 8.8% from last year's 7.1%, amounting to  $5.8 billion and $561.4 million in absolute terms, respectively.  Moreover, the external debt of the Central Bank began to increase, in  parallel with which the external debt of the Government continued to  decrease. In particular, the Government's external debt accelerated  the y-o-y decline from 0.8% to 6.5%, while the external debt of the  Central Bank changed its trend from 4.2% decrease to 18.5% increase.  In Q12023 alone, the government external debt decreased by 1%, while  the Central Bank's debt, on the contrary, grew by 1.8%, similar to  the quarterly dynamics of a year ago, when the decline in government  external debt by 0.3% was accompanied by an increase in the Central  Bank's debt by 3.5%.

Domestic government debt is dominated by government bonds  with a  decrease in the share by April 2023 to 87.7% from 93.1% a year  earlier ($ 3.9 billion or 1.5 trillion drams), with an acceleration  of y-o-y growth in absolute value from 37.1% to 56.4% . The share of  Armenian Eurobonds in y-o-y terms increased from 6.5% to 11.8%,  amounting to $529.7 million or 205.7 billion drams, with an  acceleration of y-o-y growth in absolute terms from 84.2% to 3-fold.  And the remaining 0.5% fell to the share of internal guarantees -  $22.1 million or 8.6 billion drams, with a 2-fold y-o-y increase in  absolute terms. In Q1 2023 alone, the volume of government bonds grew  by 7%, Armenian Eurobonds - by 11.6%, while domestic guarantees, on  the contrary, decreased by 5.2%, repeating the quarterly dynamics of  a year ago, when the growth of government bonds and Eurobonds by 5%  and 10% was accompanied by a decline in domestic guarantees by 1.6%.

It should be noted that the ratio of public debt to GDP in 2022  decreased from 63.4% to 49.2%, with double-digit growth in both  public debt (by 15.3%) and GDP (by 12.6%). In 2022, the ratio of  external debt to GDP also decreased - from 45.7% to 29.9%, with a  decline in external debt by 3%. The coverage of external debt by gold  and foreign exchange reserves increased from 48.6% to 63.7% in 2022,  against the backdrop of a decline in external debt while accelerating  double-digit growth in reserves from 23.5% to 27.3%. At the end of  2022, both the GDP of Armenia and the GIR (gross international  reserves) of Armenia reached a historical maximum - 8.5 trillion  drams and $4.1 billion, respectively, and the public debt exceeded  $10.6 billion Maintaining a negative migration balance and weak  population growth, with a double-digit increase in public debt,  increased the specific debt burden per capita from $3.1 thousand to  $3.6 thousand. Moreover, the per capita debt burden from external  debt remained at $2.2 thousand, and from domestic debt increased from  $870 to $1.4 thousand.