By the end of 2025, Armenia’s public debt is projected to reach around USD 15 billion, or 53% of GDP, and will exceed USD 17 billion (55% of GDP) in 2026.
For comparison, in 2024 the debt stood at approximately USD 12.3 billion. This means that within just two years, the total volume will increase by nearly USD 5 billion — a figure comparable to the country’s annual budget.
This trend reflects not merely a “technical” increase in borrowing but a consolidation of debt dependence as one of the key structural features of Armenia’s financial system.
The structure of the debt is of particular concern. While by the end of 2024 the government’s domestic and external liabilities were relatively balanced, by 2026 external debt will approach USD 9 billion (28.2% of GDP), while domestic debt will amount to around USD 8.4 billion (26.9% of GDP).
In other words, Armenia is becoming increasingly dependent on external creditors, including international organizations, foreign governments, and Eurobond holders. This represents not only financial vulnerability but also a significant political and economic factor: the larger the share of external debt, the greater the potential leverage over the country through credit lines and refinancing conditions.
The issue of debt servicing appears equally alarming. In 2026, total payments will exceed USD 2.7 billion, of which nearly USD 1.6 billion will go toward principal repayments, and around USD 1.1 billion toward interest. Interest payments alone will reach 3.5% of GDP, whereas just two years earlier this figure was closer to 2.5%. In effect, debt servicing is becoming a standalone component of the economy, diverting resources that could otherwise be directed toward investment, infrastructure, or social policy.
The government and the Ministry of Finance project that by 2028 the budget deficit will shrink from 5.5% of GDP (in 2025) to 2.8% of GDP, which in turn would allow the debt-to-GDP ratio to decline to 50% by 2030. However, these forecasts appear overly optimistic: in practice, long-term plans are rarely implemented in full, particularly in a volatile regional environment and with an economy highly sensitive to external shocks.
Another important factor must also be considered: the weighted average interest rate on public debt is expected to reach 7.1% in 2026. This is a relatively high level, especially given that a significant portion of the debt is denominated in foreign currencies. The more expensive debt servicing becomes, the more the government will be forced to resort to new borrowing — making it increasingly difficult to break the “debt spiral.”
Thus, Armenia’s public debt is becoming less of a mere financial indicator and more of a systemic constraint on sovereign economic policy. If the current trajectory continues, the country risks finding itself in a situation where key budgetary and investment decisions are driven not by domestic priorities but by external obligations and debt limitations.