YEREVAN, December 1. /ARKA/. Armenia’s public debt is a source of risk to the economy, according to the macroeconomic forecast of the Eurasian Development Bank (EDB) for 2021.
As noted in the review, the state budget in January-September 2020 was executed with a deficit of 155 billion drams. During the same period of the previous year, it was reduced with a surplus of 95 billion drams.
“Deterioration in public finances was the result, first of all, of an increase in expenditures: they increased to 1 230 billion drams from 1 053 billion drams a year earlier, partly in accordance with plans, and partly due to the need to finance measures to combat the coronavirus outbreak and support the economy. Budget revenues decreased to 1075 billion drams from 1,148 billion drams in January-September 2019,” the report says.
EDB experts note that in conditions of deficit budget execution, Armenia’s public debt increased and reached 3.8 trillion by the end of September 2020 drams or $ 7.9 billion (3.5 trillion drams, or $ 7.3 billion at the end of 2019).
In early October 2020, the international agency Fitch downgraded Armenia’s credit rating from BB- to B + with a stable outlook. The decision was driven by a sharper-than-expected decline in the country’s GDP and worsening economic forecasts.
“The source of risk for the country’s economy is the level of public debt. As of mid-2020, it reached 58.4% of GDP (53.5 at the end of 2019). The need to limit the growth of debt burden may lead to a rapid reduction in budget expenditures, which will have a constraining effect on GDP growth in the medium term, slowing down the economic recovery,” the review says.
According to IMF forecasts, Armenia’s national debt will exceed 60% of GDP in 2020, and will continue to grow in 2021, reaching about 69% of GDP.
According to the October forecast of Fitch Ratings, Armenia’s national debt will grow from 53.5% of GDP at the end of 2019 to 63.9% at the end of 2020.
The National Statistical Committee of Armenia says the total public debt of Armenia at the end of July 2020 amounted to $ 7,939,525 million, an increase of $ 220,682 million compared to June. At the same time, since the beginning of the year, the total public debt has grown by $ 618,269 million. According to the statistical reports, the external public debt of the republic at the end of July 2020 amounted to $ 6,055,237 million, an increase of $ 73,591 million compared to the previous month. In the structure of the external debt, about $ 5,576,651 million is the debt of the Armenian government (an increase of $ 70,015 million), and the debt of the Central Bank of Armenia is $ 478,586 million (an increase of $ 3,576 million). The country’s domestic debt at the end of July amounted to $ 1,884,288 million, an increase of $ 147,092 million.
Armenian Central Bank Chairman Martin Galstyan said in September 2020 that the ratio of the state debt to the GDP can reach 60% and even exceed it.
Finance Minister Atom Janjughazyan said earlier that Armenia will increase its debt burden by 260 billion drams because of COVID-19, as a result of which the budget deficit in 2020 may reach 324 billion drams. ($ 1 – AMD 508.21). -0-
