“The Armenian authorities state that if Armenia is granted loans the lenders consider it solvent, which is erroneous thinking,” the former Armenian Prime Minister Hrant Bagratyan told reporters. A total of U.S. $54m were spent on serving the foreign debt in 2008, U.S. $74m in 2009, and U.S. $115m will be spent in 2010, he said. According to Bagratyan’s forecasts, Armenia will spend a total of U.S. $280m on covering the foreign debt in 2012, and U.S. $478m in 2013. This means that Armenia will spend 9-10 times as much as the present amount on covering its foreign debt within the next few years. According to Bagratyan, last year Armenia “squandered the Russian commercial credit received at an annual interest rate of 7-8 per cent.”

“If we fail to pay the U.S. $478m, what are we to do? As a rule, such a case is considered default. If you fail to repay debts you have to make political concessions. For example, in four years we will ask for a settlement of the Nagorno-Karabakh conflict which we do not agree to now,” Bagratyan said.

As to whether Armenian received credits on political terms, Bagratyan said with reservation: “I think so, though creditors ask for funds to be borrowed worldwide. For example, interest-free loans are granted in Japan, because much money is available. But they wait when Armenia applies for a 3% loan. The Russian loan has an interest rate of +3 LIBOR, which means an annual interest rate of 7-8 per cent. We have the Nagorno-Karabakh Republic as well. The creditors think this way: now I give money, then I make use of this factor. In fact, in three or four years we will pay much more as debts than we spend on the army,” Bagratyan said. According to him, if Armenia applied to Russia for a loan at such a high interest rate, the Government might have borrowed funds from Armenian banks thereby boosting the local banking system and economy.

Bagratyan believes that the incumbent authorities are incapable of ensuring normal economic development.

As to whether the Armenian National Congress (ANC) has the necessary potential, Bagratyan said: “Yes, it has. The ANC will free the economy and properly distribute economic resources. The resources will be available to entire society rather than to a few oligarchs. We will never allow the President to become a multimillionaire or the Church to engage in commerce. The Church is officially registered as a commercial enterprise now. So what church, what Christ… Resources do not fall from the skies. We must turn what we have into resources,” Bagratyan said.

T.P.