By Rashid Shirinov
The huge external debt has been haunting the Armenian economy for many years. Today it makes about $6.4 billion, but despite the overwhelming figure, it continues to grow by tens of million dollars every month.
Recently, Armenian Finance Minister Vardan Aramyan presented to the government draft amendments to the laws “On the budget system” and “On state debt.” Experts say that most likely, the upper threshold of Armenia’s state debt will be raised and the government will continue to borrow funds.
Under the current law, the state debt of Armenia cannot exceed 60 percent of GDP, but it will obviously surpass it by the end of this year. Armenians already have no doubt that the amendments to the law on state debt will be adopted. The authorities simply have no choice but to take loans. The GDP growth is either missing or too small, so it cannot keep up with the growing debts.
Today, only a couple of million dollars remain to reach the fixed debt threshold. The Armenian government has already signed an agreement to get a new $100-million loan from Russia. Inflows are also expected from international financial institutions. The Armenian government recklessly accumulates debts, without thinking about how they will be paid back.
Armenian media reports urge that the state debt was less than $1.1 billion in 2003, $1.5 billion in 2008, $3 billion in 2009, and now it is $6.4 billion. That is, every citizen of Armenia “owes” the foreign lenders about $2,150.
Although Armenia’s debt is increasing monthly, the well-being of the country’s population is not improving. One third of Armenia lives in poverty, according to statistics, and this indicator is not decreasing for many years. In addition, the unemployment rate in Armenia is highest in the CIS area. This suggests that the government of the country continues to spend much of the borrowed loans for its own needs, but not for improving the social and economic situation in Armenia.
Today, the Armenian authorities say that if they stop taking debts, it will lead to a decline in the country’s economy. However, they obviously cannot understand that continuation of borrowing money from abroad will anyway lead to a default in the economy sooner or later.
Rashid Shirinov is AzerNews’ staff journalist, follow him on Twitter: @RashidShirinov
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