A growing debt burden instead of the promised prosperous society

Public debt continues to grow at nearly the same pace as the promises once made by the current government. Armenia’s public debt is approaching the threshold of $14 billion. According to the Ministry of Finance, as of the end of April this year, the state debt amounted to 13.6 billion dollars. It should be noted that a significant portion—approximately 96%—is held by the government, while only about 4% belongs to the Central Bank.

Discussing the increase in the debt burden is not just a statement of statistics. Many factors, including objective factors as well as risks, are hidden under this problem. At the end of the mentioned period, about 7 billion dollars of the total debt was external debt, and about 6.5 billion dollars was borrowed from domestic sources. The share of external debt again exceeds the internal debt. A few months ago, responding to concerns about the growth of public debt, the authorities argued that the positive change is the growth of domestic debt, which exceeds the external debt. Today, however, this balance has already changed.

States borrow; it is a natural process. However, in addition to efficient financial management, it is important that the borrowed funds ensure stable prospects for painless debt repayment while meeting the social needs of the population. In Armenia, however, new debt is taken on to cover the old one, and at increasingly higher interest rates.

In general, the increase in public debt is a burden for society in the present and future, regardless of objective and subjective factors. This issue is particularly pressing against the backdrop of rising unemployment, a relentless wave of inflation, worsening socio-economic conditions, and the strengthening of the “working poor” category—all this in the context of the government’s promises of a prosperous society.

Promises that have not been fulfilled…