Journal article Open Access
Ashot Matevosyan; Ani Grigoryan
Sustainability of the public debt is a necessary condition for macroeconomic stability and long-term economic growth. However, in order to be sustainable, the government must service the debt without declaring insolvency, renegotiating the terms of the debt or restructuring the debt, as well as without introducing unrealistic big pressure into economic policy.
Regardless of the debt and the burden of its servicing, over the past decade, the RA Government has managed to service the public debt of the RA on time and in full. However, this circumstance is not enough for full-fledged judgments about stability. To ensure stability, it is necessary to identify all possible risks and sources of vulnerability, so that the behavior of debt in the event of these risks becomes figurative.
The analysis of public debt stability was carried out on the basis of the MAC DSA (Debt sustainability analysis for market-access countries) methodology of two reputable financial structures widely used in international practice -the International Monetary Fund and the World Bank.
As a result of the analysis, it was revealed that:
1. Although the debt of the RA Government is manageable, it is nevertheless sensitive to economic growth and exchange rate shocks. 2. Sources of vulnerability for government debt are also high risk for non-residents - the share of debt and the share of debt in foreign currency, as well as the requirement for external financing of the economy. 3. In order to maintain the risks of government debt at a low level and reduce financing risks, it is necessary to continue reducing the debt burden in accordance with fiscal rules, the policy of improving the weight of domestic debt and take steps to maintain financial stability, further deepen and develop the market.
RA GOVERNMENT DEBT MANAGEMENT STRATEGIC PLAN FOR 2022-2024" page 3, https://minfin.am/en/page/strategy/ last entry date: 10/10/2021
Bouabdallah, Othman and Checherita-Westphal, Cristina D. and Warmedinger, Thomas and De Stefani, Roberta and Drudi, Francesco and Setzer, Ralph and Westphal, Andreas, Debt Sustainability Analysis for Euro Area Sovereigns: A Methodological Framework (April 10, 2017). ECB Occasional Paper No. 185, Available at SSRN: https://ssrn.com/abstract=2950979 last entry date: 11/10/2021
The Minister of Finance has submitted to the RA National Assembly a draft RA law "On the RA State Budget for 2022". draft state budget https://minfin.am/en/content/finansneri_nakhararn_azh-um_nerkayacrel_e_hh_2022t_petakan_byujei_ nakhagitsy/#sthash.WEQixiae.dpbs last entry date: 23.12.2021
On the issue of new Eurobonds by the Republic of Armenia https://minfin.am/en/content/hayastani_hanrapetutyan_koghmic_nor_evrapartatomseri_togharkman_veraberyal/#sthash.7NkQAA8e.dpbs last entry date: 24.12.2021
THE CONCEPT OF ISSUING FOREIGN CURRENCY BONDS ON THE INTERNATIONAL CAPITAL MARKET, the concept of the Government of the Republic of Armenia 2013. appendix to the Minutes No. 19 of the meeting on May 16 https://webcache.googleusercontent.com/search?q=cache:ZesPA-It3dEJ:https://minfin.am/website/images/files/7a543cdb.doc+&cd=1&hl=hy&ct=clnk&gl=am last entry date: 24.12.2021.
Republic of Armenia : 2019 Article IV Consultation and Request for a Stand-By Arrangement-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Armenia https://www.imf.org/en/Publications/CR/Issues/2019/06/05/Republic-of-Armenia-2019-Article-IV-Consultation-and-Request-for-a-Stand-By-Arrangement-46968 last entry date: 13/10/2021
IMF Fiscal Monitor April 2021. https://www.imf.org/en/Publications/FM/Issues/2021/03/29/fiscal-monitor-april-2021 last entry date: 14/10/2021
Fiscal Policy of the Republic of Armenia for 2022-2024", Department of Macroeconomic Policy, Yerevan 2021 https://minfin.am/website/images/files/%20%20%202022-2024.docx last entry date: 14/10/2021.
The description of the macroeconomic scenario of targeted economic growth, the conditions for its provision and the fiscal scenario can be found in the subsection "Scenario of targeted (high) economic growth" of the document of the medium-term expenditure program for 2022-2024
After the fall of 2020, the Armenian economy has entered the stage of stable recovery. The IMF summed up the results of consultations in 2021 https://www.minfin.am/hy/content/2020t_ankumic_heto_hayastani_tntesutyuny_te_akokhel_e_kayun_verakangnman_pul_amh-n_ampopel_e_2021t_khorhrdakcutyunnery/?fbclid=IwAR1kzMfRLktNU6-YZ080CTEz_2E5NSKDwCvJKQAT4GJl_Dr6C5UH35Xu8y8#sthash.pxiN5JHV.dpuf last entry date: 23/12/2021