Armenia’s public debt is continuing to rise in absolute terms despite its government’s plans to sharply cut back on borrowing this year.
The total amount of the government’s and the Central Bank’s outstanding debts rose by $123.5 million to almost $6.9 billion last month. Low-interest loans extended by the World Bank, the International Monetary Fund and other multilateral institutions account for most of this figure.
According to official estimates, the government’s debt was equivalent to 55.4 percent of Armenia’s Gross Domestic Product at the end of last year. Finance Minister Vartan Aramian said in December that the government will cut this ratio to 54.4 percent by the end of 2018.
Aramian told RFE/RL’s Armenian service (Azatutyun.am) late last week that the government is planning to obtain around $360 million in fresh loans this year to finance the state budget deficit. “This is a substantial decrease from last year,” he stressed.
The Armenian public debt rose by $863.5 million in 2016 and 832.5 million in 2017. It stood at $1.9 billion before the 2008-2009 global financial crisis that plunged the county into a severe recession.
Artak Manukian, an independent economist, noted that the debt grew faster than the Armenian economy last year. He said this fact is raising questions about “the qualitative aspect” of economic growth which accelerated to 6.7 percent in 2017, according to official statistics.
Annual government spending on debt servicing is expected to peak at $736 million in 2020. A senior Finance Ministry official said in late December that $307 million is due to be spent on debt repayments this year. The sum is equivalent to roughly 10 percent of overall public spending envisaged by the 2018 budget.