Is the growth of Armenia’s public debt hindering significant increases in government spending?

Armenia’s public debt continues to grow. Although the topic is frequently discussed, it increases steadily month by month. We are dealing with rather high growth rates of Armenia’s public debt.

According to the Ministry of Finance, as of July this year, the country’s public debt surpassed $14 billion, with government debt accounting for $13.5 billion.

Let’s take a closer look at the debt structure during this period. The share of domestic debt exceeds that of external debt. This has both advantages and drawbacks.

Since 2018, Armenia’s public debt has been growing at a rapid pace. At the end of 2017, the debt stood at $6.7 billion. In 2018, it rose to $6.9 billion, and by the end of 2024, it had nearly doubled to $13 billion.

In other words, in just six years, Armenia’s public debt has doubled. And this picture has emerged under a government that frequently speaks of “unprecedented” macroeconomic indicators, especially related to the economy, and often speculates in the context of its policies.

One of the problems associated with public debt is the strain it places on the budget. At the same time, spending is not increasing in key areas.

For example, the most discussed topic in recent days has been the lack of increase in defense spending. Arguments have been made that military expenditures in 2025 have significantly increased, that debt obligations in the defense sector have been repaid, etc., and therefore we are within the range of normal growth.

In reality, however, we see three overlapping factors: the cost of servicing military debt, the rapid growth of public debt, and a deliberate decision not to increase defense spending. This raises a critical question—could the rising debt burden be the reason for the lack of increased investment in such a vital sector?

If this concern is valid—and there are certainly many prerequisites for it—then we should recall our economic growth, which is neither stable nor long-term. It becomes quite difficult and troubling to even imagine the problems the country may face if this trend continues, given the current pace of public debt growth.