Economic chaos deepens in Armenia

/By Azernews/

By Nigar Abbasova

Since Armenia is in deep economic crisis, the country may fail to escape default.

Armenia’s former prime minister, MP Grant Bagdasaryan has announced that default is inevitable and it is expected to begin in the nearest future, Aravot agency reported.

He said that the state constantly borrows, and it will surely end with a default, which will be announced in a few years.

"We are starting to destroy the foundation of the state, without any justification, from whom, and how much we take in for debt, for what and how to check these debts. You destroy the state, which we have created," he said.

In the first quarter of this year alone, Armenia’s external debt increased by $576 million hitting $5.2 billion. The country’s foreign reserves have registered a fall of 10 percent, while the debt has increased by 12 percent.

The ratio of external debt to the Armenian GDP is 51%. It means that the debt per capita will be $1, 750.

MP Stepan Margaryan, in turn, has recently stated that the new Tax Code adopted in the country will lead to a catastrophe of small and medium-scale entrepreneurship. “Deriving of benefit in practically impossible taking into consideration the law,” he said.

“We have disused the issue with National Unity party and came to a conclusion that the adoption of the Code will lead to the decrease of assessment basis. The country cannot expect neither domestic nor foreign investments,” he added.

Foreign loans account for the bulk of the national debt burden. Foreign debt, which outstrips Armenia’s state budget by billions, was supposed to help put the country on a sustainable development path, but, so far, the country has achieved almost no progress.

The volume of direct foreign investments to the real sector of Armenia in January to March 2016 has amounted to 14.9 billion drams ($0.031 billion) compared to 35.3 billion drams ($0.073 billion) in the first quarter of 2015.

Meanwhile, the annual deflation has amounted to 2.1 percent in May. The currency outflow increased by 9.4 percent in January-April, 2016.