Armenia’s national debt has climbed to over $13 billion in the first months of 2025, according to new data from the Ministry of Finance. The increase marks a continued upward trend as the government grapples with fiscal pressures and rising borrowing needs.

As of February 2025, Armenia’s public debt stood at $13.03 billion, up from $12.84 billion at the end of last year. The country’s debt-to-GDP ratio has also risen, reaching an estimated 53.5%, still safely below the 60% legal limit but significantly higher than in previous years.

A notable development this year is the shift in debt composition. For the first time, domestic debt has overtaken external debt, a milestone in the government’s multi-year push to rely more heavily on local borrowing. Official figures show domestic debt at $6.67 billion, compared to $5.85 billion in external obligations. This change reflects a broader strategy to reduce foreign currency risk and develop Armenia’s internal debt market.

However, the trend may reverse by year’s end. The Finance Ministry has announced plans to increase external borrowing in 2025, including a new Eurobond issuance and other foreign loans aimed at financing the projected budget deficit of more than $1.5 billion. The latest Eurobond, issued earlier this year, has already attracted significant investor interest.

Meanwhile, debt servicing costs continue to rise sharply. The 2025 state budget allocates over $2.8 billion for debt repayments, including nearly $1 billion in interest payments—a figure that now exceeds annual spending on key sectors such as health and education. Officials have acknowledged the growing burden of debt servicing as a serious concern.

Looking ahead, the government expects total public debt to reach $15.6 billion by the end of 2025. Despite the increase, projections indicate the debt-to-GDP ratio will remain below the 60% cap, provided economic growth continues at the current pace.

While the overall debt remains within sustainable limits, analysts warn that Armenia’s rising fiscal obligations and expanding debt load could pose challenges in the years to come, especially amid continued regional instability and growing social expenditures.

Sources:

• Ministry of Finance of Armenia, Public Debt Bulletin – February 2025

• Ministry of Finance, 2025 State Budget Law and Budget Overview

• Fitch Ratings, Armenia Sovereign Outlook, Q1 2025

• CEIC Data, Armenia Debt-to-GDP Historical Series

• Trading Economics,

Armenia Government Debt to GDP (2023)

• IMF, World Economic Outlook 2024–2025

• Parliamentary Hearings, Budget Committee Reports, December 2024