EFSD to provide $100mln to Armenia for covering budget deficit 

ArmInfo.In the medium term, the Armenian government plans to annually attract budget loans in the amount of $300-350 million. On November 17, the Cabinet of Ministers of Armenia approved a proposal to sign an agreement between the Government of the Republic of Armenia and the Eurasian Development Bank to provide a loan in the amount of $100 million.

As noted in the explanation to the document, based on the  macroeconomic and fiscal framework of the state budget of the  Republic of Armenia for 2023, the strategic plan for managing public  debt for 2023-2025 and in accordance with the goals of the updated  plan for reducing the government's debt burden for 2022-2026.  An  annual borrowing plan for 2023 was developed.

According to the above, the total financing requirement in 2023 is  745.2 billion drams, 65.2% of which is planned to be covered by  borrowings from internal sources, and 34.8% by external loans. In the  medium term, the need for credit funds to support the budget, which  are planned to be received from international financial institutions,  including the Eurasian Fund for Stabilization and Development, is  estimated at $300- 350 million per year.

Taking into account the above, the Ministry of Finance of the  Republic of Armenia initiated the process of obtaining a budget  support loan in the amount of $100 million from the Eurasian Fund for  Stabilization and Development on the following conditions: loan  repayment period: December 31, 2024; the loan can be issued in 2023  or 2024, depending on the actual completion by the borrower of the  procedures leading to the entry into force of the Agreement; interest  rate on the loan is fixed, 4% per annum; loan repayment period - up  to 20 years, of which preferential - up to 10 years after the entry  into force of the agreement; loan servicing dates: March 15 and  September 15 of each year following the issuance of the loan.

According to the RA Ministry of Finance, by October 31, Armenia's  state debt reached $11 billion 116 million (an increase of 478.2  million), and the government debt amounted to $10 billion 592 million  (an increase of $505.6 million). According to the forecasts  underlying the draft state budget for next year, the ratio of public  debt to GDP at the end of 2024 will be 50.7%, against those expected  by the end of this year.  49.4% and actual 49.3% for 2022. The  government's debt will be 48.4%, instead of the 47% expected for 2023  and the actual 46.7% for last year. In dollar terms, the government's  debt by the end of 2024 will reach $11 billion 891 million, against  the expected $10 billion 900 million for the current year and $10  billion 086 million for 2022. In 2024, 805.2 billion drams will be  required to service and repay the government's debt, of which debt  repayments will amount to 483 billion drams, and 322.2 billion drams  for interest payments or 3.1% of GDP (2.9% per ton). 2.3% - for  2022).