Armenia`s per capita debt increased to $4.1 thousand, indicating a  growing burden

ArmInfo. In Armenia, the per capita debt increase to $4.1 thousand by October 2024, compared to $3.8 thousand the previous year. Furthermore, the per capita debt burden from external debt slightly decreased, dropping from $2.2 thousand to $2.1 thousand, while the burden from internal debt rose from $1.6 thousand to $2 thousand during the same period.

This was observed alongside a 3.8% rise, equivalent to 112.7 thousand  people, in Armenia's population to reach 3.067 million people by  October 1, 2024. Additionally, there was a 10.4% increase in public  debt, amounting to $1.2 billion. The growth in population was  primarily driven by the relocation of citizens of Artsakh who were  forcibly displaced to Armenia in September 2023, with a smaller  contribution from people relocating from the Russian Federation,  rather than  natural population growth.  As of October 1, 2024, the  coverage of external debt by gold and foreign exchange reserves by  decreased to 56.8% from 64% compared to the previous year. This  decline was due to a 3.4%  drop in external debt and a 14.2% decrease  in reserves. In contrast, the year before, both external debt and  reserves had increased by 6% and 11.4%, respectively. According to  the Statistical Committee of the Republic of Armenia, Armenia's  national debt exceeded $12.5 billion (over 4.8 trillion drams) as of  October 1, 2024, showing a slow down in annual growth from 14% to  10.4%. 

This is due to a decline in external debt, while domestic debt  continues to grow. In particular, external debt shifte its dynamics  from 6% growth to a 3.4% decline, while domestic debt accelerated in  growth from 27% to 29.1%. As a result, their absolute values amounted  to $6.296 billion (2.439 trillion drams) and $6.206 billion (2.404  trillion drams), respectively. Over the first 9 months of 2024,  Armenia's public debt increased by 5.5% due to a 16.1% increase in  domestic debt and a 3.2% decrease in external debt. A year earlier,  over the same period, a 6.4% increase in public debt was accompanied  by a 14.7% increase in domestic debt and a 1.1% increase in external  debt.

In the third quarter of 2024 alone, public debt increased by 2.8%,  driven by a 5% increase in domestic debt and a modest 0.8% increase  in  external debt. For comparison,  in Q3 2023, public debt rose by  2%,  with external debt increasing by 1.2% and internal debt by 3%.  Regarding external debt, as of the end of first the 9 months of 2024,  the Government's share slightly decreased to 91.7% from 91.8%  compared to the previous year. Conversely, the Central Bank's share  increased to 8.3% from  8.2%, totaling $5.774 billion and $521.6  million, respectively.

Furthermore, there has been an annual decrease in the external debt  of both the Government and the Central Bank. Specifically, the  government's external debt shifted from a 6.6% increase to a 3.5%  decrease, while the Central Bank's debt  declined further from 0.3%  to 2%. Within the structure of the domestic public debt, government  bonds continue to dominate, with their share increasing from 87.4% to  90.8% over the year.  This amounts to $5.632 billion or 2.2 trillion  drams, with an acceleration in the annual growth rate of the absolute  value from 24.8% to 34%. 

The share of Armenian Eurobonds in the domestic debt decreased from  12.3% to 8.9% year-on-year, totaling $555.9 million or 215.3 billion  drams. There was a significant shift in the annual dynamics, going  from a 45.6% growth to 5.6% decline. The remaining 0.3% or $17.6  million (6.8 billion drams) came from internal guarantees, showing an  annual growth from 26.3% to 22.2%.  Note that the public debt to GDP  ratio increased from 49.2% to 50.5% in 2023, with the growth rates of  both public debt and GDP slowing down from 15.3% to 11.4% and  12.6%  to 8.7% respectively.  Concurrently, the ratio of external debt to  GDP decreased from 29.8% to 27.7% in 2023, with the growth rate of  external debt shifting from a  3% decline to a modest 1% growth. In  Armenia, the specific debt burden per capita rose from $3.6 thousand  to $4 thousand in 2023. The per capita debt burden from external debt  remained at  $2.2 thousand, while the burden from domestic debt  increased from $1.4 thousand to $1.8 thousand. This was observed  against the background of a 2% increase in the population of Armenia,  reaching  to 2.991 million people by January 1, 2024. The public debt  grew by 11.4% or $1.2 billion.

In 2023, the coverage of external debt by gold and foreign exchange  reserves decreased from 63.8% to 55.4%. This decrease occurred  despite only a 1% increase in external debt  and a significant 12.4%  decrease in reserves. The reserves reached a historical maximum in  August 2023, but  began to decline steadily each month thereafter.  For comparison, we note that in 2022, external debt was in decline by  3%, while reserves demonstrated double-digit growth at 27.3%.  As of  January 1, 2024, Armenia's public debt exceeded $11.8 billion. Of  this amount,  $6.5 billion is external debt, and $5.3 billion is  domestic debt. Additionally, a special note in the statistical report  highlights that the structure of the domestic debt includes the  issuance of AMGB1129A332 benchmark long-term government bonds.  On  December 28, 2023, the Government decided  to allocate 206.358  billion drams of these bonds to financial organizations to address  financial claims (property rights) arising  from the tragic events in  Artsakh in September, which led to the forced displacement of the  entire population.