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Foreign Debt Under Microscope

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  • Foreign Debt Under Microscope

    FOREIGN DEBT UNDER MICROSCOPE

    Yerkir/arm
    March 10, 2006

    The foreign dept of the Republic of Armenia will make $1.215 billion by
    the end of the year. It will grow by $107.5 during the year. Though
    the debt is growing the burden will be only 21 percent this year
    against the last year's 24 percent.

    The foreign political context

    Armenia has almost reached the countries with so-called low level of
    foreign debt burden. Mostly it was due to the fact that 5 enterprises
    were transferred to Russia against Armenia's $93 million debt. Many
    say the deal was more politics than business: the fact that these
    companies do not work is the proof.

    Russia is perfectly using the foreign financial leverage to gain
    political dividends. For instance, Russia gave up the $3 billion debt
    of the 14 poorest African countries in exchange for the G-7 countries
    to accept it in their club and reached its goal making the G-7 a G-8.

    In fact, the incredibly high prices of oil in the world market have
    made Russia rich and generous for Africa. As for the partners in
    the CIS, the relations here are developed under the traditional
    scenario. But here, Russia is using gas instead of oil.

    Nevertheless, the Armenian government has managed to ease the debt
    burden thanks to successful agreements with the other CIS creditor
    - Turkmenistan. In 1999-2003, Armenia signed several agreements to
    refinance the debt under better conditions. As a result, the share
    of low-interest and no-interest loans in the country's foreign debt
    is now 98 percent. For the coming three years Armenia is planning to
    borrow at less than 1.5 percent.

    From: Emil Lazarian | Ararat NewsPress
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