The Armenian Parliament is reviewing the ratification of a loan agreement with the Asian Development Bank (ADB), signed on November 1, 2024, under the "Fiscal Stability and Financial Market Development Program." This new loan is aimed at improving public governance systems and fostering the development of the country’s financial sector.
In his address to the parliament, Finance Minister Vahe Hovhannisyan detailed the loan agreement’s terms. According to the agreement, Armenia will receive €89.469 million to support the state budget, with the funds to be utilized by June 30, 2025. The loan has a 15-year term, including a three-year grace period, and is offered at a floating interest rate calculated as the six-month Euribor plus a 0.5% margin.
The loan will be serviced biannually, with payments scheduled for March 15 and September 15. The repayment period begins 60 days after the agreement’s signing, with both interest and principal payments made semi-annually.
The program outlines several key objectives: enhancing fiscal policy, improving public debt management and financial risk mitigation, developing financial market infrastructure, and strengthening the issuance and management of government securities.
During the discussions, lawmakers focused on reforms in financial instruments, corporate governance systems, and regulation of state-owned companies and monopolies. The Finance Minister provided comprehensive explanations to address their questions.
The parliamentary standing committee on financial-credit and budgetary issues has already issued a favorable opinion on the agreement.
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. Initially, it was expected to reach 53.5% of GDP in 2025, or $15.2 billion, with corresponding debt servicing costs increasing from 11.2% to 11.3% of total budget expenditures and from 3.4% to 3.6% relative to GDP. However, revised macroeconomic forecasts now reflect higher debt levels, necessitating adjustments to these projections.
