YEREVAN. - Armenia has some room to add up public debt, Mr Hossein Samiei, IMF mission chief to Armenia, told journalists at a briefing held in Yerevan Wednesday. 

He recalled than in the 1st quarter of 2017, the Government collected more taxes than projected, that amount exceeding by 0.2 – 0.3 percent of GDP. If this momentum keeps steady for the whole year, this would translate into more than 1 percent of GDP.

This means that the country could borrow some extra $100 million, he said.

Higher income happens because of larger receivables from the custom payments pool of the Eurasian Economic Union (EAEU) shared between member countries. Another very important reason is addressing the informal sector in a steady manner. The financial authorities are reasonably confident that these factors will last, he added. This all goes to show that government’s debt is not critical, even though it has gone beyond 50 percent of GDP, and is expected to amount $6,34 billion (56.8 percent of GDP) in 2017.

Although the government of Armenia considers this a critical point, which calls for increased austerity, one has to keep in mind that a large component of this debt is concessional. Thus, less interest is supposed to be paid over its principal amount than if it were borrowed on market terms. This could bring the net present value of the debt down to 40 percent.

This is why the government thinks to add capital expenditures, compared to its projections in December, he said.

However, should any risks come about, the Ministry of Finance will apply contingency measures, cutting non-essential current expenditures.

 “We welcome the discussions within the government on a more flexible policy of handling external debt. Of course, one does not encourage to borrow beyond the ability to repay. Rather, the policy should look both sides: both protect growth and ensure debt sustainability,” he said.