Armenia struggling under growing debts

Armenia struggling under growing debts

By Jamila Babayeva

Taking out a loan makes a person responsible for its repayment. The matter becomes complicated when there is a deadline for repayment.

Now, the Armenian government which is in a similar situation has found a new way to get out of the crisis: Borrowing more money.

Armenia has repaid a major part of its unprecedented external debt at $861 million mainly through borrowings.

The overall foreign debt of the country made up 33 percent of the revenues recorded in 2013 and reached to its peak due to early repayment of the Russian loan of $500 million.

"Armenia's external debt was $139 million in 2012 and $101 million in 2011," Deputy Finance Minister said.

Artyom Janjughazyan was speaking at a meeting on the annual report about the state budget for 2013 at the parliament.

MP Naira Zohrabyan asked Janjughazyan to explain how a $500 million loan taken from Russia was invested. "The loan was not invested as it was planned," she said.

"The loan was instead given to several entrepreneurs and people with close ties to the authorities," she added.

MP Nikol Pashinyan, in turn, said Armenia will have to repay its big external debt in 2020 by repaying $1 billion.

The annual report further indicated that Armenia had a 3.5 percent economic growth and 5.6 percent inflation in 2013 due to increase in gas and electricity prices (9.7 percent).

Furthermore, food prices increased by 4 percent, and price of non-food products went up by 3.5 percent.

Armenia is not expected to make a significant economic progress in 2014. The International Monetary Fund (IMF) slashed once again the economic forecast of Armenia in 2014. IMF experts believe that Armenia's new government is not capable of ensuring the projected a five percent economic growth in 2014.

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