YEREVAN, FEBRUARY 28, ARMENPRESS. The government of Armenia plans to further increase the dram part in the composition of the debt in coming years.

Minister of Finance Tigran Khachatryan assures that the government debt is currently stable and manageable.

He gave an interview to ARMENPRESS about the topic.

-Mr. Minister, the state debt has exceeded the permissible limits. The government is going to submit a budgetary framework to the Parliament, through which it guarantees that it will return the debt to permissible limits. By the yearend the debt to GDP is expected to reach 60.2%. As a result of what is it expected to reach the permissible level, and when will the government submit that framework to the Parliament?

-There is no such range that is considered impermissible amount of debt. There are debt values which show being in a dangerous range. That law was in the past when a certain high debt was considered impermissible for the government. However, the further regulations, and they relate to the regulations made 2-3 years ago, have brought different approaches in use, with concrete necessary steps typical to each range. In particular, it is envisaged that when the debt rate passes the 60% of GDP by any year, the government, together with a medium-term expenditure program of each year, is also presenting its program approaches to the Parliament, on what it is going to do to improve the debt rate in the next five years or make the debt more manageable. That is the reason that when we were debating the 2022 state budget in the Parliament, I had a chance to state that our medium-term goal is to greatly improve our debt rates by following that policy. This year as well when we will present the medium-term expenditure program to the Parliament in summer, we will accompany it with a revise framework of debt management which, of course, will have slightly more promising figures with positive forecasts, than the previous medium-term forecasts, because the figures of 2021 are already proving it. We can say in advance that the main goals, which were presented to the Parliament last summer together with the 2022-2024 medium-term expenditure program, will happen a year earlier. In other words, if we were planning to achieve nearly 55% level towards GDP in 2025-2026, we will achieve slightly more improved figures. It is also theoretically possible to more quickly improve that situation.

-To what extent will there be a revision?

-Our target is to have debt figures of about 54-55% by 2026. I also want to explain why we don’t want to reduce it faster. It is possible in practice because both our high economic growth rates and the increase of own revenues towards them in accordance with the government’s policy allow to think that we will have much more tax revenues and more means to conduct expenditures on our own, than it could be predicted from the very start. In that case, we could carry out both ongoing expenditures and those directed to capital or development programs at the expense of these own revenues, and have a less need or demand for attracting debt. But on the other hand, given that our debt is currently at a manageable range and is not a worrying phenomenon, we do not rule out that we may keep that new borrowings at a level which is supposed now, and to direct them for new development programs.

-Will that 60.2% debt to GDP be maintained by the end of this year?

-We think it will be within 60% in the end of this year. We plan to further increase the dram part in the composition of the debt in coming years, currently the dram debt is about 28%. When we have a dram debt, we do not bear exchange rate risks, no matter what the exchange rate for the main foreign exchange units will be by the end of the year, the debt in dram terms to our GDP will be the same.

-How much is the state debt at the moment? To what extent is that level justified, and don’t you consider it risky?

-I already said that it is not risky, it is within reliable range. According to the latest data, the government debt is assessed to be about 4 trillion 252 billion drams (8 billion 812 million dollars). If we talk from the perspective of the state debt, the debt of the Central Bank is currently 227 billion drams. They are in a reliable, manageable range and from macroeconomic terms do not contain any uncertainty both in terms of the debt size and servicing capacities.

Full version of the interview is available in Armenian. 

Interview by Anna Grigoryan

Photos by Tatev Duryan