YEREVAN, April 22. /ARKA/. “Armenia public debt in 2019 was below 50% of its GDP, but in 2020 it grew to 63.5%, exceeding the 60% threshold laid down in the fiscal rules,’ Finance Minister Atom Janjughazyan said a government meeting today.
He added that the government needs to adopt a policy that will help bring the indicator down below 60%, which in terms of risks is relatively manageable.
In this regard, he noted that the government’s medium-term spending program for 2022-2024 will provide for a set of measures to reduce the public debt/GDP ratio.
At the same time, the minister noted that Armenia’s current public debt/GDP ratio is almost comparable with developed countries.
He also noted that in 2019 Armenia was experiencing a period of recovery when its economy grew by 7.6%, creating opportunities for revising the government’s spending program.
“In 2019 our nominal tax revenues increased by 16%, and the ratio of taxes to GDP also increased by 1.4%. This enabled us to increase spending on education, health care, capital expenditures. And the deficit was brought to 1%,” Janjughazyan said.
According to him, it was this accumulated potential that made it possible to attract additional funds from the IMF and sale an issue of Eurobonds in 2020.
Nevertheless, as the minister noted, the deficit turned out to be higher than expected growing from the projected 2.3% of GDP or AMD 161 billion to 5.5% of GDP or AMD 334 billion.
According to the Eurasian Development Bank, Armenia’s public debt increased by 13.9% in 2020 to 67.3% of GDP from 53.5% in 2019. n 2020, Armenia borrowed $300 million from IMF. At the beginning of 2021, almost 75% of government debt was in foreign currency.
Earlier this year Armenia sold a $750mn 10-year Eurobond. The 3.6%-coupon February 2031 bond was priced at 97.738 to yield 3.875%, or 280.2bp over mid-swaps.
Bookmakers HSBC, JP Morgan and Citigroup set guidance at 4.125%-4.5%. Final books were over $2.5bn.
According to the National Statistical Committee, Armenia’s total public debt as of January 31, 2021 stood at $8,024.878 billion, an increase of $56.391 million from to December 31, 2020. -0-
