The Armenian government has obtained more than $450 million in fresh loans from multilateral lending institutions over the past week, raising Armenia’s total foreign debt to over $4.5 billion.
The combined debt incurred by the government and the Central Bank of Armenia (CBA) stood at well below $2 billion before a severe recession in 2009. It is now equivalent to more than 40 of the country’s Gross Domestic Product.
Last week the government secured two loans worth a total of $153 million from the World Bank and the Asian Development Bank. It formally approved on Thursday a deal with the Moscow-based Eurasian Development Bank (EDB) that will lend it $300 million in three installments.
A government statement said that the EDB’s “budgetary support loan” will be repayable in 20 years, with a 10-year grace period. It said the low-interest credit will be spent on boosting “financial stability” in the Armenian energy sector, making “management of state finances” more efficient, and improving the domestic business environment.
The statement gave no other details. The government’s press office did not immediately clarify just how the money will be used by the government. It promised to clarify the matter in the coming days.
Even before the latest loans, opposition politicians and other critics of the government expressed concern at the increased foreign debt, saying that Armenia may have trouble servicing it in the future. They have also accused the authorities of wasting more than $2 billion that has been borrowed by them during President Serzh Sarkisian’s rule.
Economy Minister Karen Chshmaritian dismissed those concerns after Thursday’s cabinet meeting in Yerevan. He insisted that the debt burden remains manageable.