Finance Minister Vahe Hovhannisyan on Friday attributed the rising cost of Armenia’s foreign borrowing to global financial conditions, brushing aside concerns about investor confidence and the country’s mounting debt burden under Prime Minister Nikol Pashinyan’s administration.
In March, the Armenian government floated $750 million in Eurobonds with a 10-year maturity at a steep annual yield of 7.1%. That’s a significant jump from the 3.9% yield on a similar bond issued just four years ago.
Despite the higher cost, Hovhannisyan insisted the issuance was a success. “We had strong demand—almost three times the issued amount,” he said at a press briefing. He claimed that the elevated yield simply reflects a broader rise in global interest rates, especially those on U.S. Treasury bonds, which serve as benchmarks in international lending.
But questions remain about why Armenia, despite recording years of economic growth and capital inflows, continues to pay such a premium to borrow. When pressed on this, Hovhannisyan admitted he was puzzled: “That question also interests me.”
He blamed widening risk spreads and geopolitical uncertainty for the persistence of Armenia’s relatively poor credit ratings. Yet he did not clarify why neighboring Azerbaijan and Georgia, both of which face their own geopolitical challenges, maintain stronger credit standings.
Hovhannisyan suggested that peace with Azerbaijan could eventually improve Armenia’s creditworthiness, implying that financial stability hinges on normalization with Baku—a claim that sidesteps the internal factors contributing to investor hesitation.
Meanwhile, the Finance Ministry continues to frame the Eurobond issuance as a vote of confidence. In a statement released in March, it claimed the high demand for the bonds “underscores the stability of Armenia’s macroeconomic and financial systems.”
However, the numbers tell a more complicated story. Under Pashinyan’s government, Armenia’s public debt has more than doubled, reaching $13.6 billion. While the debt-to-GDP ratio has slightly declined since its pandemic-era peak—falling from 63.5% in 2020 to just over 50% now—critics argue this is largely due to inflationary growth rather than improved fiscal management.
No major Western or international investment projects have materialized during Pashinyan’s seven-year tenure, further calling into question the government’s claims of economic credibility.
As borrowing becomes more expensive and foreign investors remain cautious, Armenia’s leadership faces a mounting challenge: sustaining public spending and financing debt without clear signs of structural reform, investment, or political stability.
