Armenia to Add $320 Million in New Loans as Public Debt Reaches Record Levels

Armenia's government is set to approve $320 million in new foreign borrowing on Thursday, adding to a public debt that has more than doubled since Prime Minister Nikol Pashinyan came to power in 2018.

The financing package includes two long-term loans from the Asian Development Bank and the World Bank. According to the government, the money will help finance this year's state budget deficit, projected at 536 billion drams, or about $1.47 billion. Officials expect the deficit to fall below 5% of gross domestic product this year, down from 5.5% in 2025.

The latest loans come after a steady increase in government borrowing. Since November, Armenia's government and Central Bank have secured about $500 million in additional financing. Combined public debt has climbed from roughly $6.5 billion when Pashinyan took office to about $14.6 billion, even as tax revenues have risen sharply in recent years.

Economists note that a growing share of the debt has come from domestic borrowing, which generally carries higher interest rates than loans from international financial institutions. Armenia has traditionally relied on lower-cost financing from organizations such as the International Monetary Fund, the World Bank and other multilateral lenders. Opposition politicians have frequently pointed to the country's rising debt as evidence of what they describe as unsustainable fiscal policies.

The government rejects that criticism. Pashinyan and other officials argue that Armenia's debt remains at a manageable level because it is equal to about half of the country's gross domestic product, compared with roughly 60% in 2021. However, the International Monetary Fund projected in 2025 that the debt-to-GDP ratio is expected to increase in the years ahead.

The cost of servicing that debt has also risen significantly. Government figures show Armenia spent 349 billion drams, or about $950 million, on debt payments in 2025—nearly three times the amount spent in 2017. Debt servicing accounted for more than one-tenth of total government expenditures, highlighting the growing share of the national budget devoted to repaying existing obligations.

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