Armenia's Finance Minister Assures Public: National Debt Exceeding $10 Billion Poses No Threat

Despite Armenia's national debt surpassing the $10 billion mark, Finance Minister Vahe Hovhannisyan has reassured the public that there is no cause for immediate concern. Speaking in the National Assembly on Monday, Hovhannisyan emphasized the importance of evaluating the national debt in relation to the country's (GDP).

"We have always said that the absolute value of the [national] debt does not mean anything; we should look at the relative indicator of the debt to the [country’s] GDP. We are targeting to have a [national] debt to GDP ratio of 48.5 percent in 2024. Below 50 percent of GDP is considered a safe and risk-free level, enabling us to include additional debt in case of various shocks without subjecting our fiscal system to additional stress," stated the finance minister.

Responding to questions about the effectiveness of the national debt expenditure, Hovhannisyan highlighted the broader context of fiscal management. He pointed out that tax revenues, constituting 80 percent of the financial operations, play a crucial role. Monitoring institutions and inspection bodies ensure the efficiency of spending, providing necessary oversight.

Addressing concerns about capital expenditures, Hovhannisyan acknowledged challenges in pace but underscored qualitative improvements. "Capital spending is increasing significantly, and while our capacity is not growing at the same rate, we are enhancing its quality each year," he stated.

Looking ahead to 2024, Hovhannisyan revealed plans for an 8-percent increase in wages within Armenia's labor market, driven by various economic developments. However, he clarified that the minimum wage would remain unchanged to avoid unintended salary increases for state employees. Pension rates would also remain steady for the upcoming year, as outlined in the medium-term expenditure plan.

The Finance Minister assured that Armenia's economic strategies are geared towards achieving target indicators in 2025-2026. While challenges exist, the government remains committed to prudent fiscal management, ensuring the nation's financial stability and sustainable growth in the face of evolving economic landscapes.