Armenia is among the countries with the lowest debt burden: Arshaluys Margaryan

Today Armenia is among the countries with the lowest debt burden. Arshaluys Margaryan, Head of Department of Public Debt Management, RA Ministry of Finance, told about this reporters today during the press conference “Armenia’s economic challenges” organized by Economic Journalists Club.

A.Margaryan stated that the dynamics of state debt recorded refraction only during the 2009 financial-economic crisis, when wider means have been involved, and the debt increased. Throughout recent years debt and GDP/debt ratio grows, however, not spontaneously. Debt indices worsened not only due to comparable low temps of economic growth, but also—exchange rate variations (depreciation of Armenian dram has increased the burden of external debt).

Pursuant freshest data issued by RA Ministry of Finance, as of late September 2016 Armenia’s external debt comprised around USD 5.6 billion, from which USD 506.4 million is that of the Central Bank of Armenia (CBA). Government’s debt comprised USD 5 billion 88.5 million, greater part of which—USD 4 billion 84.2 million is the external debt.

As compared to the beginning of ongoing year, Armenia’s state debt has increased by USD 517.2 million, however, Arshaluys Margaryan considers this doesn’t mean that the state debt is not manageable.

State debt manager doesn’t accept, when it’s stated that we have approached to a dangerous debt threshold. He states, besides debt/GDP ratio, other indices for the assessment of debt burden (debt/export, debt payment/export and etc.) Armenia is ranked among the countries with less debt burden.

Moreover, according to Arshaluys Margaryan, Armenia is the only country, where the debt of CBA is included in the external debt, in other countries by saying external debt only that of the Government is meant.

However, all this, according to A.Margaryan, doesn’t mean that we don’t face issues. In his words, we are approaching to a bothering threshold. And main reason is that recent economic developments were not so favorable.

One of the biggest issues, according to him, is that pressure of state debt service on the budget has increased. If debt payments comprised 1-2% of budget incomes, then presently they exceed 8%. According to Arshaluys Margaryan this means that increase of budget expenditures only provides the debt service.

He sees solution to the issue in acceleration of economic growth temps. Arshaluys Margaryan considers, if economic growth temp exceeds 5%, we won’t face any issues. He believes, that Armenia has the potential for such and even higher temp.

By Babken Tunyan