Armenian central bank spends over $1bn to prop up dram, opposition MP claims

By bne IntelliNews February 10, 2016

The Central Bank of Armenia (CBA) spends between $1bn and $1.5bn a year to prop up the dram, former Prime Minister and opposition MP Hrant Bagratyan claimed at a new conference on February 9, adding that the country's foreign debt "already reached $5.4bn".

However, data from the National Statistical Service (NSS) contradict Bagratyan's claims; according to NSS reports, foreign debt increased by 13.8% y/y to $4.3bn in 2015, and CBA owed $476.3mn or almost a tenth of that amount. Meanwhile, the government owes more than $3.8bn to foreign creditors. The Armenian dram has been among the most stable currencies in the Caucasus and Central Asia in recent years, losing 17% of its value. In comparison, the Azerbaijani manat lost half of its value in 2015, while the Georgian lari lost 40% of its value in 2014-2015.

Armenia's public debt is a source of concern for Yerevan, as most of it is owed in foreign currency and is therefore vulnerable to exchange rate fluctuations. Foreign debt accounts for over 85% of Yerevan's public debt, which is expected to reach 49.4% of GDP or $5.57bn in 2016, up from 48.3% of GDP in 2015.

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