ArmInfo. In 2023, the Government of Armenia bought back part of the Eurobonds issued in 2015 with maturity in 2025, thereby mitigating the risks associated with co-financing in the future. Finance Minister Vahe Hovhannisyan stated on May 29 in parliament at a hearing on the implementation of the budget for the past year.
The head of the Ministry of Finance recalled that the state budget deficit amounted to 189 billion drams in 2023, instead of the planned 267.8 billion drams. As explained by the minister, this is due to the lower level of expenditure to income. In terms of deficit financing, the lowest level was recorded for external loans - 124.6 billion drams against the planned 192 billion drams, he added.
"Here we can record that in previous years we had a very low level of implementation of budget expenditure items financed by external loans. The indicator has been improved, but continues to be at the lowest level in terms of performance," he said, without specifying specific figures. According to him, during the reporting period, public debt increased by 14%, which was mainly facilitated by a 31.1% increase in domestic government debt.
"In 2023, in conditions of rising interest rates in foreign markets and an increase in the debt burden, the growth of payments at nominal interest rates exceeded the growth of GDP, revenues and expenses of the state budget of the Republic of Armenia. As a result, the burden on interest rates exceeded last year's figure and amounted to 10.7% of the state budget and 2.7% of GDP, which is a fairly high figure," Hovhannisyan noted.
At the same time, as the head of the Ministry of Finance assured, all the guidelines set for managing public debt were maintained and the average interest rate on the debt increased by 0.7 percentage points compared to 2022.
"The debt repayment schedule of the Armenian government is calculated until 2054 and from the point of view of co-financing risk, the Ministry of Finance identifies the periods during which Eurobond repayments occur - 2025, 2029, 2031," Hovhannisyan indicated.
In order to mitigate these risks, the Cabinet of Ministers of Armenia in 2023, despite the crisis conditions, managed to carry out an early repurchase of part of the Eurobonds with maturity in 2025 in the amount of $500 million (issued in 2015) - approximately $187 million.
Back in July 2023, Finance Minister Vahe Hovhannisyan considered it possible the early redemption of Eurobonds with maturity in 2025 in the amount of $500 million, issued in 2015. The minister recalled that the repayment of the second tranche of sovereign bonds in the amount of $500 million is planned in 2025 (Armenia made the issue on March 19, 2015 for a period of 10 years and with a fixed annual yield of 7.5% - ed. note). However, in order to mitigate the future burden and being guided by the current economic situation in the republic, Armenia will most likely begin the process of repurchasing these Eurobonds ahead of schedule, he noted. According to the Ministry of Finance, in 2023, Armenia increased its public debt by 11.4% or $1 billion 207.6 million - up to $11 billion 845.3 million. During the reporting period, government debt in American currency increased by $1 billion 208.3 million or by 12% - from $10 billion 086.4 million by the end of 2022 to $11 billion 294.6 million, and in drams - by 602.3 billion drams or 15.2% - to 4 trillion 571.9 billion drams. By May 2024, Armenia's public debt in dollar terms crossed another psychological mark of $12 billion. In dram equivalent, the figure decreased by 2.4%. During the reporting period, government debt in American currency increased by 2.2% or $248.9 million - from $11 billion 294.6 million to $11.543.5 billion, and in drams - by 95.3 billion drams or 2.1% - to 4 trillion 476.7 billion drams. 84.9% of government debt was raised at a fixed interest rate. By the end of April this year, the share of domestic debt in government debt increased from 47.3% by the end of 2023 to 49.62%, and dram debt increased from 45.9% to 48.5% by the end of last year.
