Azernews.Az

Armenia’s foreign debt has exceeded a staggering $2.5 billion, or 36% of its Gross Domestic Product (GDP), the government estimates.
According to the country’s finance ministry, more than 90% of the borrowed funds are owed by the government. The alarming fact is that Armenia has limited resources to clear the debt, and its borrowing more funds is deemed inevitable.
The ultra-nationalist Dashnaktsutyun party’s parliamentary faction estimates that the South Caucasus republic’s foreign debt is expected to reach $3.5bn by the end of 2010, or 43% of the GDP.
International experts are also utterly worried about Yerevan’s heavy debt, stressing the threat posed to the country’s economy by this trend. Aristomene Varoudakis, World Bank Country Manager for Armenia, has warned that Armenia’s foreign debt is expected to exceed 50% of the GDP next year.
Grant Bagratyan, Armenia’s former prime minister, said the amount allocated from the state budget to clear the arrears and accrued interest have been rising by the year, warning of serious implications.
"Whereas in 2008 Armenia was spending only $8 million to repay foreign debt, as early as in 2013 the figure will reach $478 million. Then, to clear the foreign loans, we will have to designate twice as much money as we spend on the military, which we are already maintaining with difficulty."
Bagratyan noted that the rising spending on external debt has also created suitable conditions for outside political pressure on Armenia, and the situation in this respect is disastrous.
"If it goes on like this, in just a year’s time we, ourselves, will be begging to speed a settlement to the Upper (Nagorno) Garabagh conflict. It is no secret to anyone that this conflict’s lingering on is the main factor impeding Armenia’s development not only economically, but also politically, democratically and in other areas."
Azerbaijan and Armenia fought a lengthy war that ended with the signing of a cease-fire in 1994, but Armenia continues to occupy Upper Garabagh and seven other Azerbaijani districts in defiance of international law. *