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Global Insight
October 14, 2011
Armenian External Debt Grows at Accelerating Pace in Q2 But Remains Manageable
by Venla Sipila
Armenia's total external debt ended June at USD6.965 billion,
according to figures from the country's National Statistical Service.
This marks growth of 6.0% during the second quarter, following an
increase of 4.5% in the first quarter. In annual terms, gross debt
increased by over 28%, after a gain of some 25% year-on-year (y/y) in
the first quarter. In particular, general government debt, which
accounted for around 41% of total external debt, increased by 14.5%
y/y. Meanwhile, the banking sector's external debt more than doubled
from a year ago, while their share of total borrowing made around 20%.
In addition, ARKA News reports that Armenia's gross foreign assets at
the end of the second quarter stood at USD4.616 billion, bringing
Armenia's net external debt to USD2.349 billion.
Significance:A large share of Armenia's external borrowing originates
from official creditors. While Armenia has now recovered from the deep
recession ushered in by the global crisis of 2008-09, which negatively
affected important remittance inflows thus increasing borrowing needs,
substantial external assistance is still needed in order to cover the
financing gap and to support Armenia's economic transition. However,
Armenia's relationship with multilateral creditors is reasonably good
(seeArmenia: 23 September 2011:), and the concessionary nature of
borrowing from them should keep debt servicing costs manageable in the
coming years. A good working relationship with official creditors is
also particularly important, taking into account the deteriorated
global outlook, which implies rising risks to private capital inflows.
October 14, 2011
Armenian External Debt Grows at Accelerating Pace in Q2 But Remains Manageable
by Venla Sipila
Armenia's total external debt ended June at USD6.965 billion,
according to figures from the country's National Statistical Service.
This marks growth of 6.0% during the second quarter, following an
increase of 4.5% in the first quarter. In annual terms, gross debt
increased by over 28%, after a gain of some 25% year-on-year (y/y) in
the first quarter. In particular, general government debt, which
accounted for around 41% of total external debt, increased by 14.5%
y/y. Meanwhile, the banking sector's external debt more than doubled
from a year ago, while their share of total borrowing made around 20%.
In addition, ARKA News reports that Armenia's gross foreign assets at
the end of the second quarter stood at USD4.616 billion, bringing
Armenia's net external debt to USD2.349 billion.
Significance:A large share of Armenia's external borrowing originates
from official creditors. While Armenia has now recovered from the deep
recession ushered in by the global crisis of 2008-09, which negatively
affected important remittance inflows thus increasing borrowing needs,
substantial external assistance is still needed in order to cover the
financing gap and to support Armenia's economic transition. However,
Armenia's relationship with multilateral creditors is reasonably good
(seeArmenia: 23 September 2011:), and the concessionary nature of
borrowing from them should keep debt servicing costs manageable in the
coming years. A good working relationship with official creditors is
also particularly important, taking into account the deteriorated
global outlook, which implies rising risks to private capital inflows.