Armenia’s Foreign Debt Estimated at $827 Million

YEREVAN (Noyan Tapan)–The foreign debt of Armenia was estimated to reach $827 million this year.

In 1996 the debt was set at $517.1 million in 1996 while in 1997 it was $690,994 million–reported the Ministry of Finance.

The correlation of the foreign debt to the gross domestic product in 1997 was 39.91 percent; it will be 40.4 percent this year. The index of the correlation of the foreign debt to exports is also growing.

According to the report of the ministry–one of the major showings of the evaluation of the burden of the debt is its net cash cost. The net cash cost of the foreign debt in 1997 totaled $585.55 million–or 36.01 percent of gross domestic product and 250.89 percent of export. The correlation of the net cash cost to the gross domestic product in 1998 dropped down to 24.86 percent–which is a sign of negative tendencies.

The net cash cost shows what sum is needed to settle the current debt of $690,994 million–for example–in 20 years. The latter is introduced at any financial institution as a deposit and in 20 years–due to the interest rates–is transformed into $690.994 million.

The correlation of the general service of the debt within the year to exports is a major showing of the burden of the national debt that shows the ability of the country to service its foreign commitmen’s. In 1998–the showing of the service of the debt to exports is expected to total 11,67 percent–against 14,18 percent reported for last year–which indicates positive changes in the given sphere.

The sum of the service of the foreign debt in 1996 totaled $18.56 million ($5.34 million of them being interest rates); in 1997–$33.10 million and $15.44 million respectively. They are expected to total $33.84 million and $16.55 million this year. All showings on the service of Armenia’s debt are within the framework of the country’s showings with the lowest burden of the debt.

The domestic debt of Armenia formed on September 15–1995–following the maiden issue of government securities. The volume of short-term government bonds in circulation made up 23.207 billion drams in 1997; this year it totaled 29.3 billion drams.

The report of the Ministry of Finance and Economy for 1997 says that in the year under review interest paymen’s on the domestic debt rose by 66 percent reaching 4.44 million drams as compared to the previous year–whereas this year–as compared to 1997–it is expected to grow by 39 percent. In 1998 interest paymen’s on short-term government terms are expected to total 3.35 percent from the budget expenses–against 2.52 percent in 1997.

Government securities–which are a component part of the domestic debt–allocated against the credit line of the Central Bank of Armenia (issued in the form of short-term government bonds and government long-term coupon bonds in 1997-98) make up 10,290 billion drams by their nominal cost. Coupon bonds worth 9 billion drams are in the portfolio of the Central Bank of Armenia.

There were no repaymen’s on the line of government long-term coupon bonds as of yet: the term of their repayment is from 1.5 up to 5 years–the volume of unredeemed short-term government bonds in circulation makes up 1,290 billion drams.

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