Մատչելիության հղումներ

By Emil Danielyan
The Armenian government set a new record for long-term borrowing on Tuesday with a sale of its first-ever bonds repayable in 15 years.

The Ministry of Finance and Economy announced that it easily auctioned off 1.16 billion drams ($2.57 million) worth of such bonds to local banks and other financial institutions. It presented the transactions as proof of growing investor confidence in long-term macroeconomic stability in Armenia.

The government bonds had a seven-year maturity when they were first introduced in September 2004. The Finance Ministry gradually raised it to 12 years in three bond issuances carried out earlier this year. “Those issuances laid the firm groundwork for the release and distribution of the 15-year bonds,” the ministry said in a statement

Successive Armenian governments until recently mainly relied on short-term treasury bills to ensure their projected budgetary expenditures. The borrowing used to be hugely expensive, with yields averaging 60 percent in the late 1990s. The treasury bills, repayable in up to 12 months, were therefore a major source of revenue for the Armenian commercial banks at the time.

In 2000, the government introduced mid-term treasury notes repayable in up to five years. The cost of government borrowing has since plummeted from an average of 24.3 percent to single-digit levels. Yields on the new 15-year bonds, for example, averaged 8.82 percent.

Still, internal borrowing has never been a major source of government funds in Armenia. sales of treasury papers this year will cover only about 13 percent of the government’s 2005 budget deficit projected at 50 billion drams. They raised the government’s internal debt by 10 percent to 51.3 billion drams ($114 million).

The figure pales in comparison with Armenia’s external debt which is approaching $1.2 billion.

(Photolur photo: Finance Minister Vartan Khachatrian.)
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