By Ruzanna Khachatrian and Atom Markarian
Prime Minister Andranik Markarian denied on Monday reports that Armenia intends to seek more interstate loans from Russia less than two years after repaying its post-Soviet debt to Moscow with equities.
Markarian’s Russian counterpart, Mikahil Fradkov, was quoted by news agencies as saying last week that his government’s draft budget for next year includes $31 million in loans to be made available to Armenia.
“We have no urgent need to borrow more from the Russian government,” Markarian said when asked by RFE/RL to comment on those reports. “There is no such task. It makes no sense for us to get a $31 million loan.”
He argued that Armenia already has access to cheap credit from the World Bank and the International Monetary Fund, its main international lenders in the past ten years. Lending by the two institutions is due to continue unabated in the next few years.
Markarian said the Armenian government is also well placed to secure “several hundred million dollars” in additional assistance from the United States under Washington’s Millennium Challenge Account (MCA) program to promote economic and political reform around the world. U.S. assistance to Armenia since independence has already exceeded $1.5 billion.
“There is no need to turn to another country for a loan,” he said.
Armenia used to borrow heavily from Russia in the early 1990s. The Russian “credit emissions” of Soviet-era rubles were a key source of financing for its government until the introduction of the national currency, the dram, in late 1993. The money was subsequently converted into hard currency and accounted for the bulk of Yerevan’s $100 debt to Moscow.
Armenia repaid the debt in late 2002 by placing five state-run enterprises, including a big thermal power plant, under Russian ownership. In a similar deal last year, the Russians took over the financial management of the nuclear power station at Metsamor in return for effectively writing off its $40 million debt to Russian nuclear fuel suppliers.
Government critics say the equities-for-debt deals have only deepened Armenia’s economic dependence on Russia. One of the most outspoken of them, prominent Soviet-era dissident Paruyr Hayrikian, again condemned them as a “high treason” on Monday.
“It is inadmissible to cede our national property to a foreign state that had deprived us of our independence,” Hayrikian said at a ceremony marking the 14th anniversary of a declaration of independence adopted by Armenia’s first post-Communist parliament.
But government officials counter that the deals have considerably eased the debt servicing burden on the Armenian state budget. The country’s external debt stood at just over $1 billion as of July 1, 2.5 percent down from last December’s level.
Arshaluys Markarian, a senior Finance Ministry official, attributed the fall to the U.S. dollar’s weakening in the international currency markets. But he said this year’s dramatic strengthening of the dram is largely irrelevant to the government’s balance sheet.
“The dollar’s depreciation [against the dram] will have an almost zero impact on our debt servicing,” Markarian told RFE/RL. “Of course, we are now in a more beneficial position as far as debt payments are concerned. But given the fact that we expect a similar amount of hard currency revenues to the state budget the two things compensate for each other, making the losses and the gains almost equal.”