“The state debt per capita in Armenia has reached 4700 US dollars, last year

Vahe Davtyan writes: “The state debt per capita in Armenia has reached 4,700 US dollars, compared to 4,200 US dollars last year.

Debt is growing in an economy with an increasingly eroded industrial base and declining demographic dynamics (albeit with immigration touted. I’ll get to that separately).

The main problem is that the debt does not turn into an economic result.

There is no qualitative economic change. There is no increase in productivity. There is no development of value-added industries. You don’t have to go far – open the economic statistics of the last years.

And where does that money go?

Mainly, capital expenditures, the results of which are obvious. asphalt crumbling before our eyes every day, rapidly decaying infrastructures, showy and unviable projects.

This is simply a waste of funds with no return.

As a result, the debt becomes not a development resource, but a political tool to close the budget holes, fulfill the social function of the state, and show short-term “results”.

Yes, the debt-to-GDP ratio still does not cross the red line: 47.3%, under the conditions of the 50% target index.

But this is the surface. Deep down lies the real risk: the burden of debt is shifted onto businesses, households and future taxpayers without a corresponding economic return.

The longer this pattern continues, the more expensive the consequences will be.”

—