Armenian experts warns of deep economic crisis
25.10.2016,
18:49
There is no threat of default in Armenia, however, a deep economic crisis is quite possible, former head of the Central Bank Bagrat Asatryan said today when asked to comment on a wake-up call, made earlier this month by Armenia’s first post-Soviet president Levon Ter-Petrosian that Armenia may soon face a “real economic disaster” in the form of a “hidden default.”
YEREVAN, October 25. /ARKA/. There is no threat of default in Armenia, however, a deep economic crisis is quite possible, former head of the Central Bank Bagrat Asatryan said today when asked to comment on a wake-up call, made earlier this month by Armenia’s first post-Soviet president Levon Ter-Petrosian that Armenia may soon face a “real economic disaster” in the form of a “hidden default.”
Asatryan said a major concern is the growing public debt that has surged from 15% of GDP in 2008 to 50% in 2016. To make the surge more illustrative, he said the pubic debt has grown from $2 billion in 2008 to more than $5 billion in 2016, while maintenance expenditures have grown from 2% to 10% of the GDP.
He said the economy of a country that has borrowed such resources, should have developed dynamically, however, it is actually in recession. According to him, the biggest challenge for Armenia now is its external debt servicing, which has become the most actively growing spending item of the state budget.
Asatryan said further that the government must be very careful in borrowing new loans and use the already borrowed money more efficiently. He said the loans channeled into infrastructure projects are used very ineffectively.
"The authorities should take necessary steps to ease the burden of debt service, otherwise we will face if not a default, then a deep crisis, exiting of which will be very difficult", - Asatryan said.
According to the National Statistical Service, at the end of September 2016 Armenia's state debt stood at $5.6 billion, having increased by 2.2% from the previous month. The ministry of finance expects it to grow this year by $789 million to $5.867 billion. In $2017 it is expected to soar further to $6.277 billion. The share of public debt to GDP will increase from 48.8% in 2015 to 54.1% in 2016 and 55.1% in 2017. ($ 1 - 475.40 drams). --0-
Asatryan said a major concern is the growing public debt that has surged from 15% of GDP in 2008 to 50% in 2016. To make the surge more illustrative, he said the pubic debt has grown from $2 billion in 2008 to more than $5 billion in 2016, while maintenance expenditures have grown from 2% to 10% of the GDP.
He said the economy of a country that has borrowed such resources, should have developed dynamically, however, it is actually in recession. According to him, the biggest challenge for Armenia now is its external debt servicing, which has become the most actively growing spending item of the state budget.
Asatryan said further that the government must be very careful in borrowing new loans and use the already borrowed money more efficiently. He said the loans channeled into infrastructure projects are used very ineffectively.
"The authorities should take necessary steps to ease the burden of debt service, otherwise we will face if not a default, then a deep crisis, exiting of which will be very difficult", - Asatryan said.
According to the National Statistical Service, at the end of September 2016 Armenia's state debt stood at $5.6 billion, having increased by 2.2% from the previous month. The ministry of finance expects it to grow this year by $789 million to $5.867 billion. In $2017 it is expected to soar further to $6.277 billion. The share of public debt to GDP will increase from 48.8% in 2015 to 54.1% in 2016 and 55.1% in 2017. ($ 1 - 475.40 drams). --0-
