Armenian government may ask Russia for another $1 BLN credit

YEREVAN, July 10. /ARKA/. Armenian government may borrow additional $1 billion fr om Russia, Orakarg newspaper (Agenda) reports on Tuesday. 

According to the source, the authorities haven’t decided wh ere to allocate the money yet. The government intends to take another loan without paying off the previous $500 million received in 2009. 

The reported credit was given for 15 years at LIBOR+3% annual interest rate. The source says the Cabinet decided to start non-official talks related to Russian lending as Brussels summit of donors had been deferred. At the summit the government planned to attract $1.5 billion to Armenia till 2013.

Along with this the newspaper points out that the decision to receive another credit may be irrational, as it will increase the state debt burden. This year state debt/GDP ratio, not considering the possible credit from Russia, will jump by 1 p.p. to 42.6%. Expenses for servicing government debt will climb by 54% to 177.7 billion drams.

The source mentions that the foreign debt makes a lion share in the structure of the state debt in general. This year foreign debt/GDP ratio was 36.1%, and it is forecasted to fetch up 36,6%. The foreign debt is expected to increase to $3.9 billion. “If Armenia receives another Russian credit, its foreign debt will up to 46,2%, and state debt/GDP ratio will be 52.6%. Thus Armenian will enter the risk zone,” the newspaper concludes.—0--