Armenia’s public debt will rise by about 3 percent to $7.3 billion next year, Finance Minister Atom Janjughazian said on Thursday.
Janjughazian downplayed the anticipated increase, saying that the debt will fall as a share of Gross Domestic Product. The debt-to-GDP ratio is projected at around 55 percent for this year.
In Janjughazian’s words, Armenia’s government and Central Bank will owe a total of $7.1 billion to mainly foreign creditors in December, up from almost $6.9 billion in January 2018.
Their combined debt rose by $863.5 million in 2016 and by 832.5 million in 2017. It totaled just $1.9 billion before the 2008-2009 global financial crisis that plunged the county into a severe recession.
Janjughazian defended the current government’s plans for more borrowing, saying that it is needed to finance the state budget deficit which is projected to fall to 2.2 percent of GDP in 2019. “We borrow not to take care of our current expenditures or to please a part of the society but to create more output which can generate new capacities,” he told a news conference.
“When we say that we are going to borrow that creates the impression that we are making the situation worse,” complained the minister. He insisted that the situation will actually improve because the debt burden will ease in relative terms next year.
The draft state budget for 2019 approved by Prime Minister Nikol Pashinian’s cabinet last week sets aside 85 billion drams ($176 million) for debt servicing. The sum is equivalent to roughly 5 percent of overall budgetary expenditures planned by the government.