Armenia to reduce its domestic debt from 2025 on - minister 

ArmInfo. In 2025 and in the coming years, we will gradually reduce the rate of increase of domestic debt in the total government debt. This was stated by the Minister of Finance of Armenia Vahe Hovhannisyan on June 17 from the rostrum of  the parliament, answering a question from the member of the ruling faction "Civil Contract", deputy head of the standing committee of the National Assembly Babken Tunyan.

According to the minister, the country's financial authorities will  have to assess whether they are "pulling the blanket over  themselves", thereby depriving the economy of the necessary  financing. At this stage, the Ministry of Finance has already set a goal in the Medium-Term Expenditure Program for 2026-2028 to reduce domestic debt from 51.8% by the end of 2024 to 50% this year, and then 49.7%, 49.3% and 48.1% from 2026 to 2028.

As the head of the Ministry of Finance pointed out, over the past two years Armenia has been consistently increasing its domestic debt, including for the reason that .  Over the same period, most of the deficit was financed by issuing domestic debt, he added.

Back in June 2023, when the growth of domestic debt in the total volume of government debt was gaining momentum, in a conversation with an ArmInfo correspondent, the former Minister of Finance of Armenia, international consultant on public finance management Vardan Aramyan noted that domestic debt issued on an annual basis, like any  "medicine" in large doses, can harm the body, and ultimately lead to diseases, the expert notes. Vardan Aramyan recalled the so-called "crowding out effect", when the state, borrowing excessively more funds within the country, leaves comparatively less funds for the private sector, thereby crowding out investments - in fact, depriving the economy of tens of billions of drams of potential investments. In addition, most domestic companies, for objective reasons, have limited access to foreign credit resources, and they are able to take loans only within the country. "Banks are more willing to issue loans  at the same interest rates to the state with zero risk, which is why the government, albeit indirectly, is helping to crowd out  investments from the private sector and depriving the country of another source of growth," Aramyan explained.