The government said the loan proceeds must be spent by September 30, stressing that their timely receipt is important for financing expenditures envisaged under the state budget.
Armenia’s budget deficit is projected at 537.5 billion drams (about $1.5 billion) this year.
The new loan must be repaid by January 15, 2044. Armenia will begin repaying the principal in 2031 after a five-year grace period.
The interest rate is floating and stood at 4.241 percent as of July 30.
The new borrowing adds to Armenia’s recent foreign loans secured by the government to finance its budget deficit. In early August, the government formally approved $320 million in new loans from the Asian Development Bank and the World Bank for that purpose.
Armenia’s public debt, which stood at roughly $6.5 billion when Prime Minister Nikol Pashinian came to power in 2018, has more than doubled under his administration, reaching $14.6 billion by mid-2026, despite strong growth in tax revenue touted by the authorities.
The sharp increase has been driven by the government’s more expensive internal borrowing as opposed to low-interest loans provided by the International Monetary Fund (IMF), the World Bank and other multilateral institutions. Armenian opposition figures regularly cite it in their criticism of the government’s economic policies.
Pashinian and other government officials have downplayed Armenia’s increased debt burden, arguing that it is equivalent to about half of Gross Domestic Product, down from 60 percent in 2021. The IMF forecast in 2025 that the debt-to-GDP ratio will rise in the coming years.
Critics also point out that debt repayments now weigh heavily on the state budget. The Armenian government spent 349 billion drams ($950 million) on debt servicing in 2025, almost three times more than in 2017. The figure accounted for over 10 percent of its total budgetary expenditures.
