Ongoing depreciation of dram may increase Armenia’s foreign debt

YEREVAN, June 28. /ARKA/. If the Armenian national currency, the dram, keeps on losing its value against the greenback, the government will carry on with expansionist policy that may push Armenia’s foreign debt further up, according to Mikael Verdian, an expert from Forex Club, who told a news conference today that in 2011 the ratio of GDP to foreign debt was 73.29 percent.

The Armenian dram has devaluated by over 6 percent against USD from May. Verdian said this process is happening also in some other countries, particularly, in one of Armenia’s largest trade partner Russia. 

"This explains why the greenback is becoming a "safe haven" for businesses and citizens. He said the rise in savings deposits kept in US dollars is another factor depreciating the dram. According to Verdyan, as of April 2012, some 42.67% of deposits were kept in USD.

Armenia’s foreign debt in the first quarter of 2012 increased by 1.8% (or $65.7 million) from the beginning of the year to $3.633.9 billion (1.419.5 trillion drams). 

Some 82.6% of the debt or $3.002.6 billion were owed by the government, which grew by 1.7% or $51.7 million from December 30, 2011. The Central Bank’s debt stood at $631.4 million having increased by 2.3% or $14 million. It made 17.4% of the total debt. Some 70.4% of the debt or $2.557.2 million were owed to international lending institutions, which grew by 3.3% percent from December 30, 2011. Armenia’s debt to World Bank stood at $1.355.2 billion or 37.3% of the total debt. It grew by 1.4% from the previous quarter. -0-