YEREVAN, November 23. /ARKA/. External funds attracted by the government of Armenia from international lending institutions must be invested in effective and paying projects, an economist Vardan Bostanjyan said today.

"At its core, external debt is not a bad institution. In fact, many of the most powerful economies of the world have large external debts, but they can very effectively use these funds. In Armenia we have been unable so far to use foreign loans properly, transparently and effectively," he said.

According to Bostanjyan, if the budget projects a deficit and it is necessary to ensure economic growth, the latter is done by attraction of foreign loans.

"In 2016, the ratio of external debt to GDP will come close to 50%. And, of course, the growth of external debt will create new problems," he added.

According to the National Statistical Service, Armenia’s external debt at the end of September 2015 stood at $4.070.6 billion, an increase of 0.05% from the previous month.

The 2016 draft state budget calls for a 2.2% GDP growth. The GDP deflator is expected to be 4%, the 12-month inflation is projected at 4% (± 1.5%), and the budget deficit at 3.5% of GDP.-0-