Armenia increases sovereign debt to cover budget deficits

Following recent elections, the Armenian government has actively sought new loans to address budget deficits. A recent agreement involves a loan of 250 million euros (approximately 280 million USD) from the French Development Agency.

This follows previous borrowing, including 200 million USD from the World Bank and 150 million USD from the Asian Development Bank. Additional loan programs have secured roughly 100 million USD to fund the budget deficit. Within the framework of the French Development Agency agreement, participation from the Asian Development Bank could potentially add another 250 million USD.

While the government justifies these loans as measures to improve fiscal systems, debt management, and financial market efficiency, the funds are being directed toward covering daily operational expenses—such as pensions and salaries—rather than long-term capital investments like infrastructure, reservoirs, or factories.