In a short video posted on Facebook over the weekend, Papoyan seemed to gloss over money borrowed by the Armenian government from internal sources, which accounts for half of the total sum.
“Armenia’s external debt is not $12 billion. Armenia’s external debt is $5.96 billion,” he said in an apparent bid to dispel concerns about the country’s increased debt burden.
The figure cited and emphasized by him includes only low-interest loans provided to Armenia by the World Bank, the International Monetary Fund and other foreign lenders. Papoyan said nothing about the rest of the public debt generated by sales of government bonds and treasury bills. Viewers of the 51-second video pointed to this fact in their comments, wondering why he is providing incomplete or misleading information.
The minister, who is a senior member of Pashinian’s Civil Contract party, replied to one of those comments, saying: “The internal debt is what the state owes to its citizens. Like what you owe to a member of your family. It’s the same thing as taking [money] out of one pocket and putting it into another.”
Papoyan downplayed the significance of internal borrowing despite the fact that it is much more expensive that what Yerevan borrows from external sources. According to official statistics, Armenian government bonds and treasury bills carried last year an average interest rate of 10.6 percent, compared with a 3.5 percent interest rate set by foreign lenders.
The size of Armenia’s external debt was also underreported by Papoyan. As of December 31, it stood at nearly $6.5 billion, according to the Armenian Finance Ministry.
The country’s public debt totaled around $6.4 billion when Pashinian came to power in 2018. Garik Petrosian, a senior Finance Ministry official, downplayed its sharp increase since then when he spoke to RFE/RL’s Armenian Service in November. He argued that the debt is now equivalent to just over half of GDP, down from 63.5 percent in 2020 and 60.3 percent in 2021.