Armenia’s ex-FM, MP of the Prosperous Armenia Party (PAP) Vartan Oskanian left one more message on his Facebook page.

The message deals with “the two topics the mass media are discussing now,” which, he believes, are of paramount importance for Armenia’s future.

The first is the rise in the price of Russian gas. The second is the issue of borrowing up to US $1bn from Russia. The issues are so serious that the government must either confirm or refute, Oskanian writes.

If the media reports on the rise in the price of Russian gas are true, but Armenia’s government intends to keep the price down until the presidential election scheduled for next February by handing 10% of its 20% share in the ArmRusgasprom Company over to Gasprom, it may cause a number of serious problems:

1. The 20% share in ArmRusgasprom is owned by the Republican of Armenia, and the government has no right to effect the transaction without informing the public.

2. By effecting a secret transaction the government is affecting the gas pricing mechanism in the domestic market.

As a result of secret dealings, both socially vulnerable and well-to-do sections of population, as well as businesses, will be equally subsidized. The government should at least make this transaction public as soon as possible and subsidize vulnerable sections’ expenses.

With respect to government borrowing, Oskanian writes:

The claims that Armenia’s national debt is under control and can even be increased are not well based. Armenia’s current national debt is about 43% of the country’s GDP, which is a serious challenge for Armenia’s economy for a number of reasons:

1. Armenia’s foreign debt constitutes 86% of its national debt. Armenia’s foreign exchange debt totals US $4bn. With the US $1bn expected to be borrowed from Russia, Armenia’s national debt will exceed 55% of the GDP.

2. The loans granted Armenia were not granted on easy terms. They are loans at floating interest rates, which are near the LIBOR+3 interest rates.

3. Given Armenia’s small state budget, serving a US $400m debt is a most serious challenge for Armenia’s budget and economic development.

4. Armenia’s national currency is depreciating day by day, whereas the country has to serve its foreign exchange debt. This means that the debt service expenses are increasing as well.

5. Armenia’s economy did not effectively use its foreign debt in the previous four years.

Before borrowing new funds, Armenia’s government must be accountable to the public by informing it of how it spent each penny of the nearly tripled national debt during its 4-year activities. Armenia’s parliament should raise the issue this September, Oskanian writes.