During a session of Armenia’s National Assembly on December 3, Finance Minister Vahe Hovhannisyan presented a revised draft of the 2025 state budget, indicating that the ratio of public debt to GDP will reach 54.3% by the end of next year, up from the previously projected 53.5%.
The increase in this indicator is attributed to a higher budget deficit, which will exceed the 2024 level by 0.9 percentage points. However, the minister emphasized that tax revenues as a share of GDP are expected to grow by 0.7 percentage points.
According to Hovhannisyan, this growth will not be driven by tax hikes but by improved tax administration efficiency and the elimination of ineffective tax incentives that distort the overall tax system.
Despite the rise in public debt levels, Hovhannisyan assured lawmakers that the situation will remain under control and will not pose risks to the country’s fiscal stability. He also noted that the government will continue to evaluate the effectiveness of expenditures and optimize them on an ongoing basis.
BMG highlights that the increase in public debt in 2025 above previously forecasted levels reflects a continuing trend. According to Armenia’s Ministry of Finance, the country’s public debt is projected to reach 49.8% of GDP, equivalent to $12.9 billion, by the end of 2024.
Initially, it was planned that in 2025, the debt-to-GDP ratio would rise to 53.5%, or $15.2 billion, accompanied by an increase 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, new macroeconomic realities have necessitated adjustments to these forecasts, leading to higher figures.
