According to fiscal rules, there are exceptional cases where a temporary exceedance of the maximum threshold for the government debt-to-GDP ratio is permissible. This was reported by Martin Galstyan, Chairman of the Central Bank of Armenia, during a press conference on July 30.
Galstyan stated that currently, this ratio in Armenia is below 50 percent. "If our government partners decide to increase or reduce expenditures due to uncollected revenues, they might incur certain debt that exceeds 50 percent, but I don’t think we are currently facing an issue with the 60 percent threshold," Galstyan said.
According to him, the fiscal rule also stipulates that if debt exceeds the critical threshold, current expenses must be covered in the following year according to a specific rule.
"In short, problems do exist, but I do not believe they are severe enough for us to approach the 60 percent threshold," the Chairman noted.
He also added that there has been a significant increase in debt in drams: "In other words, the proportions of foreign currency and dram debt have changed significantly. For the first time, the debt in drams has exceeded the foreign currency debt."
Earlier, BMG reported that according to the Ministry of Finance's forecasts, by the end of 2024, Armenia's government debt is expected to reach 5.314 trillion drams (over $13.5 billion), which will account for 50.5% of the country’s GDP, compared to 49.3% of GDP at the end of 2023.
It is important to note that in 2024, 805.2 billion drams (over $2 billion) will be required for the repayment and servicing of government debt. Of this amount, 483 billion drams (over $1.2 billion) will go towards repaying the principal debt, while 322.2 billion drams (over $827 million) will be allocated for interest payments.
