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EUROBONDS TO INCREASE ARMENIA'S FOREIGN DEBTS - ECONOMISTS
11:10 * 11.03.15
Armenian economists turn out to be pessimistic about the Government's
recent decision to approve Eurobonds' release.
The negative outlook is particularly striking against the backdrop
of recent forecasts by Moody's Investors Service and Fitch, which
have downgraded the country.
Economist Ashot Yeghiazaryan says he finds the measure an attempt to
make up the budgetary deficit. "Attracting foreign borrowings through
bonds is just a possible source to meet the deficit in the budget. For
now it is a desire; as to how and on what terms the bonds will be
distributed, that's a matter of time. Anyway, the Government does
need extra resources to fill the budget. With the foreign investments
being down and no exports recorded, entrepreneurial activity is in a
state of stalemate; we observe a slowdown in the paces of economy,"
he told Tert.am.
Commenting on the possible impact of the international financial
institutions' reports, the economist said he expects them to lower
the country's advantages in terms of borrowing foreign loans.
"Perhaps, the Government will change certain approaches and establish
new relations with the West in an attempt to raise its rating to
receive borrowing on privileged terms. But that depends only upon
the Government's behavior," he noted.
Speaking to Tert.am, economist Vigen Khachatryan said he sees attempts
to attract money resources behind the decision. But he questioned
the effectiveness of such efforts in light of Euro's depreciation on
the market.
"The European Central Bank is going to print about 1.1 trillion Euros
and put about 60 billion into circulation every month. So our decision
to issue Eurobonds in such circumstances implies that we will have to
pay a higher price for them in future, not counting the interest rate.
So our losses may turn out even higher," he said, warning of increased
foreign debts.
Khachatryan said he expects an increase in the bonds' interest rates
in the wake of the recent reports downgrading the country. "Bond sale
is an accepted practice in a number of countries, but it is important
for us to avoid an untrustworthy debtor's status by issuing bonds
for several years in row. If we borrow a loan, we may have difficulty
serving them in future; that's the problem," he explained.
"I am against applying these instruments, as they increase the foreign
debts, forcing you to pay extra interest rates in future. Given the
current status of Euro, I don't think taking such a step is right,"
the economist added.
http://www.tert.am/en/news/2015/03/11/eurobonds/1613810
11:10 * 11.03.15
Armenian economists turn out to be pessimistic about the Government's
recent decision to approve Eurobonds' release.
The negative outlook is particularly striking against the backdrop
of recent forecasts by Moody's Investors Service and Fitch, which
have downgraded the country.
Economist Ashot Yeghiazaryan says he finds the measure an attempt to
make up the budgetary deficit. "Attracting foreign borrowings through
bonds is just a possible source to meet the deficit in the budget. For
now it is a desire; as to how and on what terms the bonds will be
distributed, that's a matter of time. Anyway, the Government does
need extra resources to fill the budget. With the foreign investments
being down and no exports recorded, entrepreneurial activity is in a
state of stalemate; we observe a slowdown in the paces of economy,"
he told Tert.am.
Commenting on the possible impact of the international financial
institutions' reports, the economist said he expects them to lower
the country's advantages in terms of borrowing foreign loans.
"Perhaps, the Government will change certain approaches and establish
new relations with the West in an attempt to raise its rating to
receive borrowing on privileged terms. But that depends only upon
the Government's behavior," he noted.
Speaking to Tert.am, economist Vigen Khachatryan said he sees attempts
to attract money resources behind the decision. But he questioned
the effectiveness of such efforts in light of Euro's depreciation on
the market.
"The European Central Bank is going to print about 1.1 trillion Euros
and put about 60 billion into circulation every month. So our decision
to issue Eurobonds in such circumstances implies that we will have to
pay a higher price for them in future, not counting the interest rate.
So our losses may turn out even higher," he said, warning of increased
foreign debts.
Khachatryan said he expects an increase in the bonds' interest rates
in the wake of the recent reports downgrading the country. "Bond sale
is an accepted practice in a number of countries, but it is important
for us to avoid an untrustworthy debtor's status by issuing bonds
for several years in row. If we borrow a loan, we may have difficulty
serving them in future; that's the problem," he explained.
"I am against applying these instruments, as they increase the foreign
debts, forcing you to pay extra interest rates in future. Given the
current status of Euro, I don't think taking such a step is right,"
the economist added.
http://www.tert.am/en/news/2015/03/11/eurobonds/1613810