Armenia

• Total external debt: $2.52 billion (World Bank, 2008)
• Total external debt payments: Gives $366 million each year to the rich world in debt payments. (World Bank, 2008)
• Population: 3.1 million (World Bank, 2008)
• Percentage of adults who can read and write: 99.4%
• Average life expectancy: 71.7 years
• HIV prevalence: 0.1%
• Total health spending: 1.4% of GDP (2003)
• Total spending on debt service payments: 2.8% of GDP
• GNI: $12.4 Billion (World Bank, 2008)

(All statistics from World Bank and United Nations Human Development Index, 2007. Data is latest available - 2005 unless otherwise stated)

Recent History
A landlocked country with Turkey to the west and Georgia to the north, Armenia has an ancient Christian heritage but has spent centuries under Turkish or Persian control. An independent Republic of Armenia was proclaimed at the end of World War I but Armenia soon came under Soviet control, which lasted until 1991. Armenia emerged from long years of Soviet rule only to enter into conflict with Azerbaijan over the region of Nagorno-Karabakh in Azerbaijan, much of which remains occupied despite the war coming to an end in 1994.

Background
The first years of independence were marked by war with Azerbaijan; considerable economic deterioration; and a 65 percent decline in real output during 1991-93. There followed a period of economic growth but this had little impact on poverty reduction until after 2000, since when poverty has fallen somewhat. There still needs to be a focus on reducing poverty: a quarter of the population are undernourished and a third live on less than $2 a day and especially on job creation as unemployment stands at 36% (all statistics from the 2007/2008 UN Human Development Index).

Where has the debt come from?
A large proportion of Armenia’s debt comes from Russia during the Soviet period. It also has large debts with the IMF and the World Bank.

Debt cancellation status
Armenia is officially classed as a lower-middle income country by the World Bank. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. This does not take into account the size of Armenia’s external debt in comparison to the value of exports, its domestic debt or what Armenia needs to spend on tackling poverty. As it was a low income country until recently, it received some additional debt assistance from the UK, through the UK Multilateral Debt Relief Initiative.

The New Economics Foundation calculates that Armenia requires 32% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.

Last updated: April 2008