Government may take low interest loan to develop economy: economist

Economist Hrant Mikayelyan considers the proposal of former prime minister of Artsakh Arayik Harutyunyan addressed to Armenia’s PM Nikol Pashinyan to involve financial means in the form of state debt quite realistic.

“Involving debts is not an issue. The issue is how it is being spent. If financial means are being involved they should be spent targeted,” economist Hrant Mikayelyan said.

Former PM of Artsakh Arayik Harutyunyan came up with an open letter addressed to Pashinyan urging to make a brave step and develop economy by involving investments.

Mikayelyan said that interest rate should be low for the loan. “If we take the loan with low interest rate and address it for development of business, it may be useful. But the income received from this business must be high. I think Arayik Harutyunyan’s proposal may be applied only in case of low interest rates,” the economist said.

As a low interest rate he mentions 3-4% and says that in case it is higher problem already raises.

“Next year, if I am not mistaken, we must pay 900 million USD debts. There will be no other opportunity. If we try to close the debts by the budget means and not by refinancing, then we will have underfunding in all the sectors. So, in my opinion, it is necessary to take loan by all means. The government cannot avoid it. Taking debt is financial tool. Many take it emotionally but it should be perceived so,” the specialist said.

Earlier finance minister Atom Janjughazyan stated that in 2019 Armenia’s state debt will grow by 200 million USD reaching 7,3 billion AMD from 7,1 million.