Armenia walking on thin ice due to huge state debt
By Rashid Shirinov
Today Armenian experts and economists are very concerned about the future of the country, which is likely to be worse than Armenia’s today. The country’s state debt continues to increase but there is no recovery of economy and the well-being of population is considerably low.
Armenian media have recently reported that the country’s state debt increased by $108 million in November, thus exceeding $6.4 billion. As much as $5.1 billion constitute the external debt, while $1.3 billion is the domestic debt.
Despite these huge amounts, the country’s poor economy is not improving. The already small economic growth is slowing down, and decline has been observed in agriculture, construction and other spheres of Armenia’s economy during the first nine months of 2017.
In this regard, Armenian economic analysts remind Sargsyan’s pledges that the country’s GDP per capita will be $10,000 in 2040. Obviously, Sargsyan just wanted to console the desperate population of the country, since it is absurd to make such a statement when every citizen of Armenia “owes” foreign lenders about $2,150 due to the huge state debt.
However, the Armenian government is still dissatisfied with the multi-billion loans borrowed, therefore it now tries to raise the threshold of loan taking, which is currently established at 60 percent of the GDP. The draft amendments to the law “On state debt” were once again discussed at the Armenian Parliament on December 12, where the Finance Minister Vardan Aramyan offered not to forbid taking loans that may result in the excess of GDP beyond the fixed threshold.
The Armenian authorities are walking on thin ice, since if they overdo in taking loans, the country will certainly face the default, which will destroy the already weak economy of Armenia. Armenian experts and economists have long ago warned that it is necessary to ensure at least 7-8 percent of GDP growth to avert the default. However, the realities show that the country’s government couldn’t even reach the promised 2 percent of growth, as it stood at only 0.2 percent last year.
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Rashid Shirinov is AzerNews’ staff journalist, follow him on Twitter: @RashidShirinov
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