Huge debts remain huge problem for Armenia

/AzerNews/

By Mushvig Medhiyev

Armenia plans to apply for a $275 million external debt to heal its economy next year.

Huge amount of foreign debt greatly afflicts the Armenian economy, which heavily stands on its own two feet. The government owes huge debts to foreign financial institutions, whilst its citizens remain the main debtors of the domestic banks.

"Armenia resembles a peasant, who gets a loan from one bank to repay its debts to another bank," Armenian parliament's legislator Nikol Pashinyan said.

Armenia owed nearly $4 billion to the creditors outside the country this year, according to the New-York based Trading Economics, a source of accurate information about countries all over the world based on official statistical data.

Pashinyan added that the draft 2015 public budget does not include any data about the poverty rate in Armenia and its forecast for the next year.

"Border villages in our country hardly survive due to lack of financial sources. But the capital city Yerevan's financing increased by $4.8 million. The government has money to refresh the city's asphalt twice a year, but the budget lacks money to allocate for the border villages," he noted.

Moody's rating for Armenia's sovereign debt is Ba2, while Fitch puts the country at BB- credit rating. Ratings of the both influential organizations reveal non-investment and speculative business atmosphere in the country. The benchmark interest rate in Armenia is about 6.75 percent, according to the Central Bank.

Meanwhile, the owners of the greenhouses in Armenia were forced to sell their properties due to huge bank loans. Their appeals for getting state aid had no response, pushing them into a big financial trouble.

Local Zoghovurd paper wrote that the Armenian Justice Ministry's Compulsory Enforcement Service of Judicial Acts has auctioned 18 greenhouses because of their bank loans. Starting price of the facilities is nearly $53,500.

The greenhouse owners left their facilities as deposit in one of Armenia's banks after facing losses and accumulated debts in winter. But they failed in repaying the credits, which resulted in the seizure of their greenhouses. The entrepreneurs said they have lost their trust in the government and wish to leave Armenia.