(MENAFN- AzerNews) By Abdul Kerimkhanov
Armenia will receive a new loan and a rather large one from the World Bank.
World Bank's program "Country Partnership Framework" with Armenia for 2019-2023 totaled $500 million, but no grouds to boast.
First, there are no prerequisites that these funds will be used in the fight against corruption or in the formation of human capital. The only thing clear is that those$500 million will significantly increase the country's debt obligations, while the country's volume of obligationsis still at a dangerous point.
Forecastbythe Ministry of Finance says thateven without the WB program, the national debt will exceed the mark of $7 billion this year. At the end of 2018, the Ministry of Finance presented a loan program for 2019 and according to this program, the national debt of Armenia is expected to increase by $490 million in 2019.
Last December, it was declared that Armenia would receive the largest loan of $343 million from Russia, $53.1 million from the Asian Development Bank, $50.4 million from the International Bank for Reconstruction and Development, $9.7 million from the International Development Association, $9.4 million from the European Investment Bank, $7.5 million from the German Bank, $7.3 million from the European Bank for Reconstruction and Development, as wellas $2.8 million from the International Fund for Agricultural Development and $200,000 from the OPEC Fund for International Development.
Atom Janjughazyan, the Minister of Finance, clearly pointed out that new loans are necessary to cover the budget deficit.
"If we have a state budget in which there is a deficit, then what source do we imagine to cover the deficit? Loans," he said.
Armenia needs new loans primarily to cover budget holes. However, it is obvious that budget deficit could be considerably reduced at the expense of internal sources. The problem is a lack of desire to reduce costs.
Armenian Minister of Finance believes that given the current state of the country's economy, it is unrealistic to cover the budget deficit with something other than new loans. However, he does not take into account that expenditures should be more modest. Moreover, the indiscretion in expenditure significantly increases the country's debt obligations.
Remarkable, if we calculate the amount of public debt per capita, it turns out that today every citizen of Armenia owes more than $2,330, and this is excluding personal debts andpersonal credit obligations to banks.
Against this background, Armenia is getting into new debts. The fact that this path leads the country to default, to a catastrophe, was voiced when the previous authorities were in power. However, today Armenia goes into debts with an even faster pace.
This is not the take-off speed, which Nikol Pashinyan spoke about several months ago. This is the speed of the fall.
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Abdul Kerimkhanov is AzerNews' staff journalist, follow him on Twitter: @AbdulKerim94
Follow us on Twitter @AzerNewsAz
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