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Yerevan borrows €45.8 million to repay sovereign debt

21 November 2019 [10:45] - TODAY.AZ

By Azernews

By Abdul Kerimkhanov

Recently, Armenian Prime Minister Nikol Pashinyan has been faced with numerous criticisms over his handling of the country’s foreign and domestic policy. Among critics are also a large number of people who had high hopes for the “velvet revolution” and supported Pashinyan in overthrowing the previous Armenian leadership.

Now that the hopes for the “velvet” revolution excitement is over, Pashinyan’s former supporters blame him for the country’s multitude of problems.

Meanwhile, Armenia’s economy is growingly dependent on foreign assistance.

The International Bank for Reconstruction and Development (IBRD) will provide Armenia with a budget assistance loan worth €45.8 million, First Deputy Finance Minister Karen Brutyan said during a government meeting on November 14. He said the loan is envisaged by the 2019 budget and will be used to finance the state budget deficit.

That is, Armenia is looking for loans to cover its own budget deficit. It turns out the country does not have capabilities as well as a safety cushion for this. The calculation is made solely on the formation of new debts, while the external debt of Armenia has already exceeded 50 percent of GDP as the future generations of this country will have to return the debt. The lion's share of the Armenian budget revenues will go to cover already made debts given the government’s inclination “solve” problems with the help of new borrowings.

The Armenian public and experts were shocked by the minimal growth of the country's military budget for 2020 - by only $2 million. In Armenia, everyone understands the absurdity of this number and this is one of the reasons why Pashinyan’s rating are falling sharply.

However, as it turns out, Pashinyan has driven the country to the point that the budget cannot cover a two-million-dollar increase in the military budget. Armenia takes a loan almost 25 times higher than the planned increase.

The question arises - how is Pashinyan going to build a strong army under these conditions?

Armenian experts warn that in this state of the Armenian economy, when budget shortfalls are covered at the expense of new foreign loans, it is impossible to bring the population of Armenia to five million by 2050, as Pashinyan promised on August 5, in Azerbaijan’s occupied Khankendi city. The number of people permanently leaving Armenia continues to grow, no matter how Pashinyan tries to prevent this process.

It is noteworthy that representatives of the economic bloc from the Pashinyan’s team avoid the term “economic revolution” because they understand and see that nothing similar happens in Armenia in realities. While debts growth, a heavy burden will fall on both the current Armenian citizens and their descendants. Under these conditions, it is obvious that Armenia will not succeed in forming a truly strong army.

The demographic problem also remains one of the headaches for Pashinyan’s administration. The inhabitants of Armenia find no reason for themselves to live in a country that instead of increasing its economic power, boosts its external debts, and even drives the young Armenian male to serve in occupied lands as cannon fodder. Thus, in the near future, there's no hope that the situation will reverse for the better for the Armenian people.


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