2025 was marked by growth of public debt – Alpha Economics

According to final data for 2025, Armenia’s public debt continued to grow. By the end of the year, it reached $14.5 billion. What does the debt structure look like, and what does it reveal? A significant portion of the public debt—about $14 billion—belongs to the government, of which $7.5 billion is domestic debt and $6.5 billion is external. A positive aspect of this structure is that the share of domestic debt is larger. This means reduced currency risks, as well as the fact that the repaid funds presumably remain within the economy. However, funds raised from domestic sources are more expensive, so the burden on the budget for servicing them is considerably higher.

Despite certain positive circumstances, there are more troubling trends. In addition to the larger share of domestic debt, another positive factor is the debt-to-GDP ratio, which remains within a manageable range. However, this indicator is unstable, since GDP growth itself is unstable (economic growth has mainly been shaped by temporary factors). The strengthening of the dram against foreign currencies has also helped improve the ratio. That is, while the debt-to-GDP level is often cited as a counterargument to concerns about public debt, the indicator itself lacks stability.

Another problem is the pace of debt growth. In just one year, Armenia’s public debt increased by about $1.7 billion. Recently, the issue of poverty and the search for reasons for its persistence have been discussed more frequently. While debt growth alone cannot explain the inability to overcome poverty, it is notable that interest payments on debt servicing account for more than 11% of budget expenditures. In comparison, healthcare spending represents 5.9% of the total, while education accounts for 10%.