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Time in Yerevan: 11:07,   29 March 2024

Armenia’s public debt to drop to GDP 55% - World Bank forecast

Armenia’s public debt to drop to GDP 55% - World Bank forecast

YEREVAN, OCTOBER 27, ARMENPRESS. According to the World Bank’s October report on Armenia’s Macroeconomic Development, the country’s debt (% of GDP) will decrease and reach 55% by 2020. The debt/GDP indicator in 2017 was 58,9%.

“Commitment to the fiscal rule, which puts a cap on debt at 60 percent of GDP but also introduces operational rules at lower public debt levels, will result in a smaller fiscal deficit. Consequently, public debt (including CBA debt) is projected to fall from 58.9 percent of GDP at end-2017 to 55 percent by 2020”, the report says.

According to the report, prudent macroeconomic policies, low inflation, and favorable terms of trade will continue to support economic expansion. Real GDP growth is expected to moderate to 5.3 percent in 2018.

The new government has shown commitment to fiscal prudence. Revenues overperformed in the first half of 2018, in part due to stepped-up efforts to fight tax evasion, according to the World Bank.

Both capital and current spending underperformed, resulting in a small fiscal deficit of 0.2 percent of GDP in the first half of 2018, it said.

Goods exports rose by 20 percent y/y, reflecting stronger external demand and higher metal prices. The import bill increased by 33 percent, one-third of which was for capital goods, mostly in the mining sector, the report said.

Nevertheless, the World Bank pointed out certain risks which might disrupt the country’s macroeconomic stability.

“Domestically, political risks remain high, reflecting growing tensions as the policy initiatives of the new administration are challenged by the opposition. Uncertainty also surrounds the date and format for the snap parliamentary elections announced by the new government. Failure to produce tangible results in a reasonable timeframe that address widespread socio-economic problems— such as limited job opportunities and the perception of a lack of rule of law and rampant corruption—potentially risks reactivating domestic tensions. The materialization of any of these risks will negatively impact Armenia’s ability to implement the bold structural reforms that are essential for sustainable and inclusive economic growth”, the World Bank said in the report.

Edited and translated by Stepan Kocharyan

 

 

 

 

 

 








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