High foreign credits ruining Armenian economy

/By AzerNews/

By Laman Sadigova

Armenia has greatly complicated the already difficult situation related to the government's foreign debt.

The annual increase in external debt by an average of 7 percent since 2011 is fraught with threats in the absence of real growth.

Frequent loans that the Armenian government borrows ruin the already weak and shattered economy of this South Caucasus country. Obviously, in this case the country may face serious problems, and the current government's inability to provide a real economic growth will undoubtedly worsen the situation, unless in the current government.

Armenia’s foreign debt has increased by roughly 300 percent over the past seven years to 46.6 percent of its 2015 gross domestic product of over 4.5 trillion drams ($9.63 billion), the country’s Central Bank reported.

The ratio of external debt to GDP in the next year is reaching scaring 50 percent.

The economic policy of the Armenian authorities is characterized by monopolistic way of promotion, support for importing monopolists, the pressure on small and medium-sized businesses, pushing out any opportunity for real competition as a result.

Armenian authorities are definitely far from understanding the economic rules and without realizing that this is a wrong time to borrow continue raising the external debts.

Officials noted that the country's external debt will be very risky in terms of management if that exceeds 60 percent of the GDP.

For example, in the early December it was announced that Armenia will receive the third loan from the World Bank in the amount of $50 million. A few days later, the Eurasian Development Bank provided Armenia a $300 million loan. Moreover, $30 million were allocated from the EU to Armenia to “implement reforms.”

The worst thing in the whole situation is that money, borrowed by Armenia, are not eligibly used but just wasted. As long as the current corrupted and criminal government rules the country, its people will hardly see justice or at least shadow welfare.

On the background of decreasing internal transfers which can be named the only real income of people, the situation in Armenia is ringing alarm.

Moreover, the newly adopted 2016 public budget has also left no hope for a better year because of its high deficit rate.

The ill-conceived policy of the Armenian government drove the country in a sad situation when almost nothing can be done to fix it.

Factors that lower the international rating of Armenia in terms of implementing international financial obligations as well as in the matter of financial and economic stability are the fluctuating dram, the reduction of money supply on the market, the Central Bank's policy with regards to foreign currency reserves, specifically, reduction of reserves and uncertain prospects for the exports development.