By the end of 2016 Armenia’s public debt will make 54.4% of GDP- minister

05.10.2016 11:32
By the end of 2016 Armenia’s public debt will make 54.4% of GDP- minister

YEREVAN, October 4. / ARKA/. By the end of 2016 Armenia’s public debt will make 54.4% of GDP, of which 48-49% will be external debt,’ finance minister Vardan Aramyan told a news conference today.  He said the government expects the overall public debt to grow to the equivalent of $5.8-5.9 billion by the yearend, with external debt expected to grow to about $5 billion. He noted that of the total debt some $934 is domestic debt, including $532 million owed by the Central Bank.
According to him, Armenia’s public debt in 2014-2016 surged by another $900 million, almost as much, as remittances dropped.

“If the government had not pursued expansionary policy, the national currency, the dram, would have lost its value triggering in turn a slower pace of economic growth. The government had to borrow in order to prevent this scenario of developments," the minister said.

‘Unlike other countries, where debt growth was accompanied by economic decline and crises, Armenia  recorded GDP growth this year and projects growth also for the next year, and we think that in such circumstances there is no danger in attracting fresh borrowings and increasing  the national debt. It is important that economic growth intensify in the medium-term perspective,’ Aramyan said.

According to Aramyan, the debt / GDP ratio ceiling for developing economies is 60%, following which it is believed that the country moves to a dangerous level. However, according to him, Russia declared a default in 1998 with a public debt/GDP ratio of 38.5% and Argentina with 114% public debt/ GDP ratio.

"Overcoming the level of 60% does not mean the immediate onset of crisis, because a lot depends on the structure of the debt. In case of Armenia, it is largely subsidized funds. Investor expectations are also important, as well as the rate of economic growth,' Aramyan said.

Armenia's overall public debt surged by another $100.6 million in 2016 August to $5.484.8 billion, according to the latest numbers, released by the National Statistical Service (NSS). If compared to the beginning of the year, the total national debt increased by 8% or $407.1 million.

According to NSS, the external debt stood at $4.541.8 billion, having increased by 1% or $48.8 million from July. Some $4.044.8 billion of the external debt was owed by the government (an increase of $54.2 million), and some $497 million were owed by the Central Bank (a decline of $5.4 million.).

Armenia’s domestic debt amounted to $943 million in late August, an increase of $51.83 million from the previous month. Of that amount approximately $859.4 million were owed to resident holders of government bonds, and another $76.6 million were owed to holders of government Eurobonds. Also $7 million were government-provided guarantees. -0-


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