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Global Insight
January 10, 2013
Armenian foreign debt edges up in Q3 2012
BY: Venla Sipila
According to figures from the Central Bank of Armenia (CBA), gross
external debt ended the third quarter of 2012 at some USD7.5 billion.
This total marks an increase of 1.9% since the beginning of the year.
Total debt increased by 2.7% year-on-year (y/y) in the third quarter,
following an increase of 4.9% y/y in the second and 11.4% y/y in the
third. Total general government debt maintained a fairly stable annual
growth at some 7%, while accounting for around 42% of total external
debt. Virtually all of this was long-term debt. The CBA also reports
that FDI inflows in the third quarter of 2012 slid by some 3% both in
y/y comparison and cumulatively since the beginning of the year,
ending September at some USD5.0 billion. The latest current-account
data from the CBA have shown that the deficit for the first three
quarters of 2012 amounted to some USD840 million, which marks
narrowing of some 10% y/y, and fairly well conforms to our full-year
estimate, which currently puts the deficit/GDP ratio for last year as
a whole to around 9%.
Significance:Armenia's external finances are a source of financial
risk for the county. Indeed, while the current-account deficit has
recently narrowed somewhat, on the back of a strengthened trade
balance, we in any case expect the current-account deficit to remain
at around at least some 8% of GDP in the near term. At the same time,
the outlook or non-debt-creating capital inflows, such as FDI, is
uncertain given the instability of the external environment, and the
modest fall in these seen in the latest data is not surprising,
against this background. The uncertainty also applies to workers'
remittances, which support the current transfers account. In addition,
recent dram weakening also signals major risks, since this increases
total external payments measured domestic currency. On the other hand,
Armenia's external debt is mostly public debt, mainly owed to
multilateral creditors, and this substantially lessen the solvency
risks related to external debt service. Consequently, debt service
requirements should remain manageable in the medium term.
From: Emil Lazarian | Ararat NewsPress
January 10, 2013
Armenian foreign debt edges up in Q3 2012
BY: Venla Sipila
According to figures from the Central Bank of Armenia (CBA), gross
external debt ended the third quarter of 2012 at some USD7.5 billion.
This total marks an increase of 1.9% since the beginning of the year.
Total debt increased by 2.7% year-on-year (y/y) in the third quarter,
following an increase of 4.9% y/y in the second and 11.4% y/y in the
third. Total general government debt maintained a fairly stable annual
growth at some 7%, while accounting for around 42% of total external
debt. Virtually all of this was long-term debt. The CBA also reports
that FDI inflows in the third quarter of 2012 slid by some 3% both in
y/y comparison and cumulatively since the beginning of the year,
ending September at some USD5.0 billion. The latest current-account
data from the CBA have shown that the deficit for the first three
quarters of 2012 amounted to some USD840 million, which marks
narrowing of some 10% y/y, and fairly well conforms to our full-year
estimate, which currently puts the deficit/GDP ratio for last year as
a whole to around 9%.
Significance:Armenia's external finances are a source of financial
risk for the county. Indeed, while the current-account deficit has
recently narrowed somewhat, on the back of a strengthened trade
balance, we in any case expect the current-account deficit to remain
at around at least some 8% of GDP in the near term. At the same time,
the outlook or non-debt-creating capital inflows, such as FDI, is
uncertain given the instability of the external environment, and the
modest fall in these seen in the latest data is not surprising,
against this background. The uncertainty also applies to workers'
remittances, which support the current transfers account. In addition,
recent dram weakening also signals major risks, since this increases
total external payments measured domestic currency. On the other hand,
Armenia's external debt is mostly public debt, mainly owed to
multilateral creditors, and this substantially lessen the solvency
risks related to external debt service. Consequently, debt service
requirements should remain manageable in the medium term.
From: Emil Lazarian | Ararat NewsPress