YEREVAN. – The Government of Armenia’s recent decision to issue Eurobonds tends to become one of the most startling decisions by the working government, Haykakan Zhamanak daily reports.   

“What is the problem? Eurobonds are a means to include external debt. The government decided to sell $500 million-worth Eurobonds. Their initial interest rate is about 6 percent, [and] the period, ten years. That is, after ten years, the government is obliged to buy back these Eurobonds for $500 million and pay another 60 percent. Moreover, it is not yet known what [respective] percentage will be set in the international market. It is not ruled out that 8 or 10 percent would be set for our Eurobonds. In this case, our external debt will increase by up to $1 billion.

But more interesting is why the government decided to issue these Eurobonds at this time. As per the PM, this is done to close the $500-million loan from Russia. To note, the interest rate of this loan is 3.5 percent. So it turns out that the government is taking an extremely expensive loan to close an inexpensive and more convenient loan.

The decision to issue Eurobonds shows that the [Armenian] government has lost the sense of reality,” Haykakan Zhamanak writes.