By Mirsaid Ibrahimzade
Armenian Prime Minister Nikol Pashinyan has recently made a statement which can seem positive at first sight. He said that for the first time since 2015, a decrease was recorded in the external public debt of Armenia. As of June, the debt has declined by $120 million.
If we look at the flip side of the coin, the constantly deteriorating economy, huge debts, as well as Armenia’s policy towards its neighbors cast a shadow on this temporary “success”.
The occupation of Azerbaijani territories also worsened Armenia’s situation, since the occupier country cannot join big regional projects.
Despite Pashinyan’s positive statement, Armenia’s case of decrease of public debt does not have positive moments. The decline in the external public debt of any country which does not has proper income may be caused either by its incapability of taking new loans due to insolvency or unwillingness of creditors who simply reject issuing loans to a country.
As Armenian media informed in the beginning of the year, the country’s gross external debt reached almost $11 billion, which recorded an increase of $1 billion compared to 2017. Thus, the country nears the critical point, when the amount of debt would makes up 50 percent of the GDP, and there are clear signs of insolvency.
Armenian economist Vardan Bostanjanyan noted that in all cases, credit funds were used to solve development problems, but over the past years they have not been effective in this area. He added that the problem is in forming appropriate mechanisms for the effective use of these funds and these mechanisms do not yet exist.
Interestingly, Armenia’s Finance Ministry earlier noted that the huge loan of $343 million was planned to be received from Russia, while the country also planned to get $53.1 million from the Asian Development Bank, $50.4 million from the International Bank for Reconstruction and Development, $9.7 million from the International Development Association, $ 9.4 million from the European Investment Bank, $7.5 million from the German Bank, and $7.3 million from the European Bank for Reconstruction and Development.
However, considering that Armenia’s external public debt has declined by $120 million, it becomes evident that these creditors rejected issuing new loans to the country. Now the Armenian government will have to look for new lenders.
Mirsaid Ibrahimzade is AzerNews’ staff journalist, follow him on Twitter: @MirsaidIbrahim1
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