Armenia's national debt approaching $10 billion

As of the end of June 2022, Armenia's national debt amounted to about $9.933 billion.

Statistics from Armenia's Finance Ministry demonstrate this, Caliber.Az reports with reference to the Armenian media.

In the first six months, the national debt increased by $706 million, or by 7.7 per cent. The growth was provided by domestic debt, while external debt decreased.

In particular, by the end of June 2022, Armenia's external debt amounted to $6.496 billion, which compared to the beginning of the year was $152 million less, or 2.3 per cent.

Domestic debt reached $3.436 billion, an increase of $859 million, or 33.3 per cent.

As expected, the decline in the value of the dollar had a positive impact on Armenia's national debt.

As of the end of June this year, 65 per cent of the national debt was foreign debt. The latter is received and repaid in dollars, but money for these purposes is allocated from the state budget in drams of the Republic of Armenia. Consequently, the cheaper the dollar, the less money is sent to repay the principal and interest. And since the dram has strengthened, the national debt has decreased in dram terms. In this case, it is important to service not only external but also internal debt, since it is fully received and repaid in drams.

As of the end of June, the state debt in drams amounted to 4.429 trillion drams [$10,711 billion], which is 8.5 per cent less than at the beginning of the year.

Thus, the domestic debt amounted to 1.403 trillion drams [$3.390 billion] or an increase of 13.4 per cent. With sharp fluctuations in the exchange rate, the value of domestic debt in drams more accurately describes the growth rate than in dollars.

As for the external debt, it amounted to 2.652 trillion drams [$6,410 billion], which is 16.9 per cent less.

Less money was allocated to repay interest on the government's debt than planned.

The debt of the Central Bank accounts for a smaller part of Armenia's external debt, the rest is the debt of the government. The internal debt is also entirely the government's debt.

As of the end of June, 202, the Central Bank's external debt was $542 million. Thus, the total debt of the government has reached $9.390 billion, of which $5.954 billion is external debt, and $3.436 billion is internal.

In the first six months of this year, 96.9 billion drams [$234.3 million] were allocated from the state budget to repay interest on the government's debt, while about 214 billion drams [$517.4 million] were planned under the annual budget program.

It is assumed that the low percentage, among other factors, is also due to the strengthening of the dram.

It was planned to allocate 82.1 billion drams [$198.5 million] for servicing the external public debt, but 36.3 billion drams [$87.78 million] were actually spent.

According to the Central Bank, on June 30, 2022, 1 US dollar cost 407.2 drams, while on January 1 it cost 481.59 drams.