The Armenian Parliament has begun discussing the ratification of a €50 million loan agreement. Finance Minister Vahe Hovhannisyan presented a detailed report on the matter during an extraordinary parliamentary session on December 5.
Introducing the draft law for ratifying the credit agreement titled "Second Program for Green, Sustainable, and Inclusive Development" between the Republic of Armenia and the OPEC Fund for International Development, the minister highlighted that the funds would be allocated to cover the 2024 budget deficit of 482.9 billion AMD (over $120 million).
The 2024 state budget includes provisions to attract budget support loans totaling approximately $450 million. Under the terms of the agreement, the loan will be disbursed in euros at a floating interest rate, calculated as the six-month EURIBOR rate plus 1.56%. As of December 2, the total interest rate stands at 4.235%.
The loan has an 18-year term, including a five-year grace period. Principal repayment will begin on December 15, 2029, and continue until December 15, 2041, with semi-annual payments covering 3.84% of the loan amount. From June 15, 2042, repayments will increase to 4% of the loan amount per semester.
Earlier, BMG reported that Armenia's public debt-to-GDP ratio is projected to rise from the current 49.8% to 54.3% by the end of 2025. Initial estimates suggested this ratio would increase to 53.5% of GDP in 2025, equivalent to $15.2 billion, accompanied by a rise in debt servicing costs from 11.2% to 11.3% of total budget expenditures and from 3.4% to 3.6% relative to GDP. However, changing macroeconomic conditions have necessitated upward adjustments to these forecasts.
