Finance Minister lauds 2025 economic indicators, highlights lower deficit

The 2025 tax-to-GDP ratio improvement in Armenia exceeded the level projected in the state budget. Based on the finalized results of the previous year, this indicator is expected to improve by 1 percentage point compared to 2024, reaching 24.5 percent, which will facilitate addressing the target set for this year, Finance Minister Vahe Hovhannisyan said at a press briefing.

“We are pleased to note that in 2025 we have continued to remain in a high growth range. We are likely to achieve economic growth of around 5.5–6 percent. Of course, we are awaiting the publication of the Statistical Committee’s data. We are also pleased that from January to November, economic activity grew by 8.3 percent, while inflation trends remained in line with the target, around 3 percent. For us, an important indicator is the improvement of the tax-to-GDP ratio, which has exceeded the level projected in the 2025 budget. Each year, we have targeted a 0.5 percentage point increase improvement in the tax-to-GDP ratio. If everything proceeds according to our forecasts, we are likely to see a 1 percentage point improvement compared to 2024, reaching 24.5 percent. This brings us closer to the Government’s target of 25 percent for 2021–2026 and, essentially, makes achieving our goal for 2026 easier,” the Minister said.

According to him, this is also important in the sense that tax collection has created a very positive environment for budgetary operations, and the government did not face any difficulties in meeting their expenditure obligations.

“Moreover, we have had a smaller deficit than expected. Roughly, we will have a deficit at least 1 percentage point lower in 2025. Let me remind you that our planned deficit was 5.5 percent. Naturally, this will also have a positive impact on the Government’s debt. If we had planned for the debt at the end of 2025 to exceed 50 percent, then, according to our calculations, the Government’s debt will most likely be around 48.7 percent. Let me also remind you that, based on 2024 results, the Government’s debt was 48 percent. This, of course, also positively affects debt servicing and market trends.

This also affects the interest rates on our debt, that is, the interest rates on the treasury bonds we issue and on our foreign currency bonds in international markets. I am pleased to note that at this moment we have a historically low risk premium. For example, when we issued 10-year Eurobonds in March 2025, their interest rate was 7.1 percent, with a risk premium of 2.86 percent. By January 2026, that interest rate had already fallen to 1.96 percent. This means, for instance, that if we were to issue the same Eurobond today under the same conditions as in March, its interest rate would be 0.9 percentage points lower,” said Vahe Hovhannisyan.