The government is due to formally approve the borrowing operation proposed by the Finance Ministry during a weekly session on Thursday. In an explanatory note submitted to its members, the ministry said the AFD loan repayable in 20 years is essential for financing spending programs envisaged by Armenia’s state budget. The 2026 budget deficit is projected at 536 billion drams ($1.47 billion).
The government already obtained similar loans worth $320 million from the Asian Development Bank and the World Bank in August. It went on to borrow $91 million from the Organization of the Petroleum Exporting Countries (OPEC) early this month.
Armenia’s public debt stood at roughly $6.5 billion when Prime Minister Nikol Pashinian came to power in 2018. It has reached $14 billion since then despite strong growth in tax revenue touted by the authorities. The sharp increase has been driven by the government’s more expensive internal borrowing as opposed to low-interest loans provided by the International Monetary Fund, the World Bank and other multilateral institutions.
The debt incurred by the current and former governments as well as the Armenian Central Bank is equivalent to about half of the country’s Gross Domestic Product projected for this year. The debt-to-GDP ratio is down from 60 percent recorded in 2021, a fact emphasized by Pashinian and other government officials in response to opposition concerns about the increased debt burden.
Critics also point out that debt repayments now weigh heavily on the state budget. The government spent 349 billion drams ($950 million) on debt servicing in 2025, almost three times more than in 2017. The figure accounted for over 10 percent of its total budgetary expenditures.