The National Assembly has deeply discussed the issue of Armenia’s foreign debt. The interesting thing is the fact that the participants of these active debates were not the opposition and government, but the members of the coalition.
The chief treasurer of the country Atom Janjughazyan informed MPs that in the end of 2010 Armenia’s foreign debt 3,3 billion dollars or the GDP’s 35,6%. He said that during the coming years Armenia will have peak years but the risk will be manageable. Head of the controller commission Ishkhan Zakaryan spoke about the foreign debt too and informed that starting from 2013 Armenia will have to allocate 220-230 million dollars every year only for covering the foreign debt. According to him, this is “a very heavy load for the budget”.
During yesterday’s discussion on the budget 2010 implementation PA member Vardan Bostanjyan asked questions to the government. Before asking questions he focused on the foreign debt and said that “our nation is living on the account of others”. The head of the standing committee on financial and budget affairs Gagik Minasyan did not like these statements as he is always sentimental to any critics toward the financial issues of the state. His response was the following: “Do you mean yourself when you say that we are living on the account of others?” Following this statement he did not let Bostanjyan speak and said that we are not living on the account of borrowings as the budget deficit has been reduced from 7 to 5%.
In fact it does not matter what the officials say; they are really concerned of the high level of our foreign debt. International organizations are concerned as well. Definitely this is the reason why the representatives of IMF criticized the president’s commitment to free innovative businesses form taxes. This means that we should first of all pay our debts and only after that think of independent tax policy and privileges.
According to the current currency exchange rates, 230 million dollars are equal to 86 billion drams. If the national currency depreciates and the exchange rate grows to 400 drams per dollar, 230 million dollars will be equal to 92 billion drams. This means that 7% depreciation of the national currency during two years will result in paying 6 million more drams for covering the foreign debt. This is big money which eventually will be paid by taxpayers. Globally, if one US dollar grows for one dram, the foreign debt will grow by 3 billion drams (our foreign debt is approximately 3 billion drams). This is a strong factor resisting the depreciation of dram, which is not discussed much.
In fact a part of this money that we have received as foreign debt has been grabbed and embezzled by some people. To note, two days ago the prime-minister criticized some officials by saying that a number of items bought for the money provided by the World Bank was twice more expensive than the real price. This means that almost the half of the millions borrowed from the World Bank has been used not for the purposes of the state but private people. The same thing can be said about the money borrowed from other institutions as well. However, unfortunately nothing can be changed and it is the same as the taxpayers will have to pay that money back anyway.
In fact, Gagik Minasyan was partly true in his assertion saying that we live on the account of foreign borrowings, especially many state officials.
P.S. It is worth mentioning that new cases have been brought against Egypt’s former president Mubarack and in addition to the accusations for killing peaceful demonstrators, corruption and other crimes he is also accused in embezzling the state debt with unacceptable capacities. In other words, this debate on the acceptable limits of embezzling the state debt has also a political meaning, which may come out and be addressed one day in the future.