Armenia drowning in debt - media

Armenian newspaper 168.zham has published an article claiming that the country is drowning in debt.

“Thanks to the government's efforts, Armenia's public debt has increased at a great rate in recent years. After Nikol Pashinyan came to power, not only the state debts, but also the debt service expenses have terribly increased," the article said, Caliber.Az reports.

"This year alone, Armenia's budget, whose revenues amount to 2.7 trillion drams, will pay 805 billion drams or almost 2 billion dollars for debt service. The two billion dollars that will have to be paid this year to service the state debt is a huge burden for the Armenian budget. That is why in many cases it is done by raising new debts. The authorities take on new debts to cover the existing ones. This vicious policy plunges the country into debts from which it will never be possible to get out of without great losses.

Despite the huge amounts paid, the debt increases every year. This year will be the same. The government's debt is expected to increase by another 655 billion drams, reaching 5.3 trillion drams, approaching $13 billion. Over the course of five or six years, the Armenian authorities have raised debts of almost $5 billion.

About $644 million will be paid from the state budget alone to repay the external debt and pay interest. The repayment will be $434 million, with $210 million in interest. Another 72 million will be paid for servicing foreign currency debts taken from the domestic economy through the issuance of foreign currency bonds.

In total, the government will pay $716 million from the state budget to the foreign currency debt service. The rest will be the servicing of domestic debt, which will amount to more than $1.2 billion.

It is expected that after the sharp growth of the last two years, already this year the domestic debt will be almost equal to the external debt, the difference will be very small compared to 5-6 years ago.

It should be noted that the situation has worsened due to both huge new debts and high interest payments. Over the past three years, the average interest rate on public debt has increased by another 2.7 percentage points. It has now reached 7 percent. But that's not the end of it; it will rise again this year. The government estimates it will reach 7.2 percent.

The debts have almost doubled in a few years, and the cost of debt has risen sharply. The Armenian authorities have already left a serious burden on the budget, only by raising expensive debts. The debt is growing like a snowball and increasing the burden of maintaining the budget. This year, interest payments on the debt alone will reach 3.1 percent of GDP, amounting to 10 percent of budget expenditures," the article noted.