Foreign Debt Under Microscope

FOREIGN DEBT UNDER MICROSCOPE
Yerkir/arm
March 10, 2006
The foreign dept of the Republic of Armenia will make $1.215 billion by
the end of the year. It will grow by $107.5 during the year. Though
the debt is growing the burden will be only 21 percent this year
against the last year’s 24 percent.
The foreign political context
Armenia has almost reached the countries with so-called low level of
foreign debt burden. Mostly it was due to the fact that 5 enterprises
were transferred to Russia against Armenia’s $93 million debt. Many
say the deal was more politics than business: the fact that these
companies do not work is the proof.
Russia is perfectly using the foreign financial leverage to gain
political dividends. For instance, Russia gave up the $3 billion debt
of the 14 poorest African countries in exchange for the G-7 countries
to accept it in their club and reached its goal making the G-7 a G-8.
In fact, the incredibly high prices of oil in the world market have
made Russia rich and generous for Africa. As for the partners in
the CIS, the relations here are developed under the traditional
scenario. But here, Russia is using gas instead of oil.
Nevertheless, the Armenian government has managed to ease the debt
burden thanks to successful agreements with the other CIS creditor
– Turkmenistan. In 1999-2003, Armenia signed several agreements to
refinance the debt under better conditions. As a result, the share
of low-interest and no-interest loans in the country’s foreign debt
is now 98 percent. For the coming three years Armenia is planning to
borrow at less than 1.5 percent.
From: Emil Lazarian | Ararat NewsPress