Armenia may have to increase its public debt in order to receive large-scale economic assistance from the European Union, Prime Minister Nikol Pashinian said on Thursday.

Speaking two days after his latest visit to Brussels, Pashinian said that the EU is prepared to finance “mega-projects” proposed by the Armenian government. The projects relate to the construction and renovation of roads, schools, water reservoirs and even prisons, he told members of his cabinet.

“While being ready to help, the EU is not prepared to finance those projects by 100 percent and it expects Armenia to seriously participate in those projects,” Pashinian went on. In order to be able to co-finance those projects the Armenian government needs to significantly improve tax collection and/or obtain more foreign loans, he said.

Pashinian added that he will discuss the matter with relevant government bodies and the Central Bank of Armenia (CBA) in the coming weeks to see whether the country could manage a higher public debt.

The premier said nothing about the amount of additional aid which the EU is ready to provide to Armenia or possible external borrowing required for obtaining it. He hinted only that the government could consider raising a legal limit on the size of its outstanding debts to local and foreign creditors. That debt ceiling is currently set at 60 percent of GDP.

Armenia’s overall public debt, which also includes sums owed by the Central Bank, was on course to reach $7.1 billion in December 2018. The figure is equivalent to roughly 57 percent of the country’s GDP.

The Armenian state budget for this year sets aside $735 million for debt servicing. The sum will account for over one-fifth of the government’s overall budgetary expenditures. Debt repayments are projected to peak at $800 million in 2020.

Pashinian met with European Council President Donald Tusk, European Commission President Jean-Claude Juncker and other senior EU officials in Brussels on Tuesday.

Speaking after the talks, Tusk praised the Armenian government’s ambitious reform agenda and said the EU is ready to support it with “enhanced technical and financial assistance.” But he did not give any numbers.

https://www.azatutyun.am/a/29809436.html