Domestic debt forming part of government`s debt exceeds foreign debt for first time

ArmInfo.  By the end of June 2024,  Armenia had increased its dram debt to almost 50% of government debt.  At the same time, public debt in dollar terms crossed another  psychological mark of $12 billion 157.2 million (from $11 billion  845.4 million by the end of 2023). In dram equivalent, the figure  decreased from 4 trillion 794.9 billion to 4 trillion 718.9 billion.

In particular, according to the Ministry of Finance of the Republic,  over the 6 months of 2024, government debt in American currency  increased from $11 billion 294.6 million (404.79 drams per $) to  $11.649.2 billion (388.16 drams per $), and in drams decreased - from  4 trillion 571.9 billion to 4 trillion 521.8 billion drams. 85.1% of  government debt was raised at a fixed interest rate.

At the same time, external debt (Armenia's debt obligations to  international organizations and foreign states, funds received from  the issue of Eurobonds) decreased both in dollars and in national  currency: in dollar terms from $5 billion 950.7 million to $5 billion  737.8 million , in drams - from 2 trillion 408.9 billion drams to 2  trillion 227.2 billion drams.

Domestic debt increased both in dollars and in national currency:  from $5 billion 343.9 million to $5 billion 911.4 million and from 2  trillion 163.2 billion drams for 2023 to 2 trillion 294.6 billion  drams.

The Central Bank's debt also decreased: in dollars from $550.8  million to $508 million, in drams from 223 billion drams to 197.24  billion drams.

By the end of June this year. the share of domestic debt in  government debt increased from 47.3% by the end of 2023 to 50.7%, and  dram debt increased from 45.9% to 49.4% by the end of last year.

For January-June 2024, the volume of financing the budget deficit  through net borrowing amounted to 76.2 billion drams (287 billion  drams for the entire 2023, and the annual program for 2024 is 490.8  billion drams). 128.4 billion drams were raised from internal sources  (net proceeds from the placement of government treasury bonds), 52.2  billion drams from external sources, with an annual program of 350.8  billion drams and 140 billion drams, respectively.  153.5 billion  drams out of 345 billion drams planned for the entire 2024 (256.4  billion drams in 2023) were allocated to service the government debt  (payment of interest rates).

Creditors of Armenia

The largest creditor (external loans) of the Armenian government  remains the World Bank - the International Bank for Reconstruction  and Development and the International Development Association account  for 37.8% of the RA public debt. The second largest creditor is the  Asian Development Bank - 19.6%, followed by the Eurasian Development  Bank - 8.3%, followed by the International Monetary Fund - 5.3%, and  the European Investment Bank - 3.2%. External loans from the EU in  the structure of external debt amounted to 1.6%, the International  Fund for Agricultural Development - 1.1%, the OPEC Fund for  International Development - 2%, the EBRD - 0.9%. Among the major  creditor countries, the Russian Federation is in first place - 6%  (6.2% by the end of 2023), Germany - 5%, Japan - 2.8%, France - 5.4%,  China - 0.4%, and the USA - only 0.2% of external debt government.  Forecasts of financial authorities

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.

According to the law "On the State Budget of the Republic of Armenia  for 2024", the public debt by the end of this year. will reach 5  trillion 314 billion drams (50.5% of GDP), instead of 4 trillion 659  billion drams expected by the end of 2023 (49.3% of GDP), and 4  trillion 659 billion drams actual for 2022 (49.2% GDP). The  government's debt will amount to 5 trillion 082.9 billion drams  (48.3% of GDP) or $11 billion, 892 million, against 4 trillion 446.1  billion (47% of GDP) or $10 billion 910 million expected at the end  of 2023 and 3 trillion 969.7 billion drams or $10 billion 086 million  - for 2022 (46.7% of GDP). In 2024, the government will need 805.2  billion drams to repay and service the debt, of which 483.0 billion  drams will be debt repayment, and 322.2 billion drams will be  interest payments.