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Stronger Dram Cuts Armenia’s External Debt


By Ruzanna Stepanian
The dramatic appreciation of the national currency, the dram, reduced Armenia’s external debt by $64 million during the first half of the year, a senior official said on Thursday.

Atom Janjughazian, the deputy finance minister and head of the State Treasury, said the country currently owes foreign creditors a total of about $1.12 billion which equals nearly one third of its official Gross Domestic Product in 2004.

The bulk of the sum comes from low-interest loans made available to the Armenian government by the World Bank since 1992. The bank as well as the International Monetary Fund have disbursed tens of millions in additional loans this year.

According to Janjughazian, the stronger dram is solely responsible for the fact that the total debt did not grow and even fell in the first half. The dram rose by 20 percent against the U.S. dollar in 2004 and gained another 10 percent in the course of 2005. The Armenian authorities attribute this process to continuing economic growth and a sharp increase in cash transfers from Armenians working abroad.

Armenia’s external debt stood at almost $1.1 billion when the dram’s appreciation began in December 2003. Its ratio to GDP has steadily declined since the late 1990s parallel to a growth in the nation’s hard currency reserves. The fact that the World Bank loans are repayable in between 30 and 40 years makes its debt burden even lighter.
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