Armenia sees 2017 GDP growth of 4.3 pct, eyes Eurobond sales-FinMin

By Margarita Antidze and Hasmik Mkrtchyan

YEREVAN, Sept 28 (Reuters) - Armenia's economy is set to grow by 4.3 percent this year, more than an earlier estimate of 3.2 percent, the country's finance minister told Reuters.

Vardan Aramyan also said the government planned to sell $500 million worth of Eurobonds in 2019 or 2020 to refinance a seven-year bond that matures in 2020.

"We are going to revise the economic growth basis for 2017 and to put an indicator of 4.3 percent instead of 3.2 percent for real economic growth this year," Vardan Aramyan told Reuters in an interview late on Wednesday.

"Factors (for higher growth) are on the supply side, mostly due to high growth in the industrial sector and services in tourism ... Consumption is also recovering."

The economy of the former Soviet republic, which depends heavily on aid and investment from former imperial master Russia, is recovering from a fall in exports and remittances that cut growth to 0.2 percent last year from 3 percent in 2015.

Many Armenians work in Russia and send money home, while its giant neighbour - itself recovering from an economic downturn caused by tumbling oil prices and international sanctions - is the main destination for the country's exports.

Submitting the 2018 budget draft to the parliament on Thursday, Aramyan said that gross domestic product (GDP) growth next year is projected to be 4.5 percent.

Aramyan said the better economic forecasts were also helped by economic policies, including support for export-oriented enterprises and the agricultural sector.

The minister said the government did not need to raise money from overseas in the coming years and would help finance the budget deficit via local debt issuance.

"But there is the $500 million Eurobond repayment due in 2020 and we are going to issue new Eurobonds to repay it," Aramyan said.

He said he would be discussing prospects for issuance with investors and banks JP Morgan and Bank of America Merrill Lynch during the International Monetary Fund and World Bank annual meetings in October.

INFLATION, MONETARY POLICY, DEBT

Aramyan said he expected annual inflation to "enter the target range of 4 percent plus/minus 1.5 percent in 2017", and to be less than 4 percent in 2018.

Consumer prices in Armenia fell by 0.4 percent in August, month-on-month, but rose by 0.9 percent year-on-year.

Armenia's central bank said on Tuesday it had kept its refinancing rate unchanged at 6 percent.

Having launched a monetary easing cycle two years ago to prop up both consumer demand and inflation, the central bank last trimmed the rate to 6 percent in mid-February.

"For a short-term period I don't think there will be major hikes or cuts of interest rates," Aramyan said.

He said he expected the budget deficit to be in the range of 3.0-3.2 percent of national output in 2017, down from 5.5 percent in 2016, and 2.8 percent in 2018.

The country's debt to GDP ratio is estimated at 58.8 percent in 2017, the minister said.

"Our policy is and will be a more conservative approach to current expenditure and more aggressive emphasis on capital expenditure," Aramyan said.

He said the central bank did not need to intervene on the forex market to manage the exchange rate or to boost its currency reserves, which were sufficient to cover five months worth of imports. (Editing by Catherine Evans)

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