The government will mainly use the two long-term loans allocated by the Asian Development Bank and the World Bank to finance its budget deficit projected at 536 billion drams ($1.47 billion) this year. The deficit should fall to below 5 percent from 5.5 percent recorded last year.

The government and the Armenian Central Bank have already borrowed some $500 million since November. Their combined debt stood at roughly $6.5 billion when Pashinian came to power in 2018. It has reached $14.6 billion since then despite strong growth in tax revenue touted by the authorities.

The sharp increase has been driven by the government’s more expensive internal borrowing as opposed to low-interest loans provided by the International Monetary Fund, the World Bank and other multilateral institutions. Armenian opposition figures regularly cite it in their criticism of the government’s economic policies.

Pashinian and other government officials have downplayed Armenia’s increased debt burden, arguing that it is equivalent to about half of Gross Domestic Product, down from 60 percent in 2021. The IMF forecast in 2025 that the debt-to-GDP ratio will rise in the coming years.