Armenian Authorities Continue to Downplay Growing Debt Burden

YEREVAN (RFE/RL)–The Armenian authorities appear to remain confident about their ability to manage the country’s external debt that has more than doubled since the onset of the global financial crisis.

Deputy Finance Minister Vartan Aramian insisted on Friday that the existing level of the debt is manageable despite being an equivalent to around 40 percent of Gross Domestic Product.

That ratio is expected to peak at 44 percent in 2012. It stood at less than 15 percent only two years ago, just before Armenia was hit hard by the global recession.

The Armenian government and Central Bank scrambled to cushion the impact of the crisis with large-scale emergency loans from multilateral institutions like the International Monetary Fund and the World Bank as well as Russia. The anti-crisis funding enabled the government to avoid major spending cuts in 2009 when the Armenian economy contracted by over 14 percent.

The country’s external debt soared dramatically as a result. According to the Ministry of Finance, it stood $3.23 billion as of last November, up from $1.5 billion registered in 2008.

The sharp rise has raised concerns about the authorities’ ability to service the debt.

Hrant Bagratian, a former prime minister and a bitter government critic, on Friday put its total amount at $4.2 billion drams and said the authorities will have to spend $500 million and $700 million on debt servicing in 2013 and 2014 respectively.

“We will face a debt default in 2013 and 2014,” Bagratian claimed at a news conference. He said the authorities will be forced to either sharply cut spending or attract fresh loans.

Aramian dismissed Bagratian’s figures as grossly exaggerated, however. He said Armenia’s annual debt repayments due in 2013 and 2014 will total only $377 million and $249 million respectively.

“Our activities show that we are quite prudent in terms of borrowing and debt servicing,” Aramian told RFE/RL’s Armenian service. “As for 2013 and 2014, our analysis shows that Armenia is far from facing such [default] risks.”

“I believe that Armenia will definitely manage to cope with the debt easily. Bear in mind that we expect continued economic growth in the coming years,” said the vice-minister.

In a December 2010 report, the IMF put Armenia at “at low level of debt distress.” “The projected debt-to-GDP levels do not appear excessive, and standard stress tests show that Armenia’s public external debt remains sustainable,” IMF said.


Discussion Policy

Comments are welcomed and encouraged. Though you are fully responsible for the content you post, comments that include profanity, personal attacks or other inappropriate material will not be permitted. Asbarez reserves the right to block users who violate any of our posting standards and policies.


  1. Armanen said:

    While government debt is always an issue, the so called opposition, aka Levon and his gang, should worry more about the government debt in the country which funds most of their ‘activities’. You all know which country I am referring to.

  2. john said:

    it all a stage show manged by their external paymasters. from the same country Armanen is referring to.

  3. Avetis said:

    The debt will easily be taken care of once Armenia drops the stagnant Dram and adopts the growing Ruble. A prediction you can bet on.

  4. Hye-phenated said:

    Armenia is under a harsh economic blockade imposed by Turkey, a NATO member. Economic blockade is an act of war. Is NATO at war with Armenia? If yes, they should just say so. Hundreds of thousands of diaspora Armenians pay taxes so NATO can fund Turkish military to impose a blockade on Armenia. I say this money would be better spent if Armenians in diaspora paid a voluntary tax that would offset the blockade their governments help to support. Even a 1% tax should be enough to get Armenian economy from its knees.

    After all, when the Soviet Union imposed a similar blockade on West Berlin the whole world got outraged and sent planes to feed the starving Berliners.

    An additional tax is nothing new to Armenians – Turks in Ottoman Empire collected these taxes to “protect” the infidels. For some reason Armenians are eager to pay taxes to any state except their own thinking that an occasional $25 donation to a charity should suffice.

  5. Armanen said:


    I think the dram is only artificially stagnant due to the pressures on the CBA by the oligarchs who are in the import business thus they need an artificially strong dram vis a vis the dollar. I wouldn’t be so opposed to Armenia pegging its currency to the ruble or maybe even using the ruble, but I think the better option would be to break the oligarchic hold over the import business in Armenia. If this can not be done in a timely manner then it may be best to adopt the ruble which would then force these same oligarchs to either put up with a more free system or try to pressure the Central Bank of Russia. And the latter is unlikely at best.

Leave a Reply to Avetis Cancel reply