If you listen only to official narratives, Armenia today looks like a success story. GDP is growing, exports are booming, tax revenues are hitting record highs, and international institutions are issuing cautiously positive assessments. In 2024, economic growth reached about 5.9%, with total GDP exceeding 10 trillion drams.In 2023, tax revenues grew by more than 15%, with the government collecting 2.22 trillion drams in taxes and duties and proudly talking about a crackdown on the shadow economy.
But behind this optimistic picture lies a different arithmetic. Public debt is rising. According to official data, Armenia’s public debt stood at around 48% of GDP in 2024,and by October 2025 total public debt had reached roughly $14.2 billion.This is not catastrophic by global standards, but for a small, vulnerable economy exposed to regional shocks, it is a serious signal — especially given how quickly debt has accumulated since the late 2010s.
At the same time, nearly a quarter of the population still lives below the national poverty line. By the end of 2023, the average poverty rate stood at 23.7%.When the current government presented its five-year program, it pledged to cut poverty in half by 2026 — to around 13%.Time is running out, and reality is stubbornly refusing to match political promises.
This raises a simple question: if the economy is “growing,” taxes are “record high,” and debt is “under control,” why are so many Armenians still poor — especially outside Yerevan?
Why is debt rising?
On paper, the logic is straightforward: the state has expenditure commitments and budget deficits. In 2024, the deficit amounted to 3.7% of GDP.Roads, infrastructure, defense, social protection, support for IT companies, agricultural subsidies, and assistance for forcibly displaced persons from Nagorno-Karabakh(Artsakh) — all of this costs money.
The deeper issue is the development model itself. Armenia has increasingly relied on external resources: on borrowed money, on temporary capital inflows, on the boom linked to Russia (relocated people, re-exports, company registrations), which began to unwind in 2024.
In practice, the state is operating on a “we’ll manage today, we’ll deal with the consequences later” logic. It borrows to finance projects that are sometimes necessary but also politically useful: they show movement, they produce ribbon-cutting ceremonies, they fill the news cycle with images of “progress.” Debt, however, is not just a number. It is interest payments — and those are rising, as global interest rates have climbed and the cost of servicing Armenian debt has increased.
Every new loan is not only money today. It is also a tax on tomorrow.
Where do taxes actually go?
Formally, the answer is clear: social spending, defense, education, infrastructure, subsidies, public administration. The budget structure is transparent on paper. But the real question is not “where” in a bureaucratic sense — it is how these funds are used.
If, after years of “record” revenues and headline growth:
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poverty remains above 20%,
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regional inequality persists,
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access to quality healthcare and education still feels like a luxury for many families,
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and large-scale emigration continues,
it means that public resources are either being spent inefficiently or are being redistributed in ways that favor narrow interests — through procurement, semi-state structures, “friendly” contractors, and opaque subsidies.
We are used to thinking of corruption as envelopes and cash. But modern corruption is often perfectly legal on paper. It takes the form of decisions that redirect public money toward groups close to power — via:
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infrastructure and construction projects with inflated budgets,
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public tenders whose winners are predictable from day one,
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state guarantees and subsidized loans for a select set of companies,
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special funds and development agencies that operate with large budgets and minimal public oversight.
Legality does not guarantee fairness. Public money may be spent according to the law — and still be used against the public interest.
“Growth” on paper, poverty on the ground
In official documents, Armenia looks dynamic: GDP up, tax revenues up, average wages up.But people do not live in averages. They live in concrete realities: the paycheck of a rural teacher, the salary of a nurse, the income of a small shop owner, the pension of an elderly person, the monthly budget of a family with two children.
After two years of exceptional growth in 2022–2023 — driven largely by external factors — Armenia entered 2024–2025 with poverty still stubbornly high and inequality visible in statistical indicators such as the Gini coefficient.That means the growth has not been inclusive. It has not translated into broad-based improvements in living standards.
This is the core of the disconnect that many Armenians feel:
they are told the country is “developing,” but they don’t experience that development in their own lives.
Where does this path lead?
Rising debt, cosmetic reforms, slow poverty reduction, and a growing reliance on semi-transparent state programs create a dangerous trajectory:
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A fiscal trap. As debt grows, a larger share of the budget will go to servicing it rather than to development. Any shock — war, crisis, regional instability — will hit harder.
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Greater pressure on taxpayers. To keep debt “sustainable” and satisfy creditors, governments often choose to tighten the tax noose — not on large capital, but on small and medium businesses and ordinary citizens.
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New “legal” corruption schemes. The more money flows through the state, the more incentives appear to create special funds, programs, and agencies where accountability is blurred and the sums are significant.
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Political fatigue and cynicism. When people are told for years that “everything is on track” but their lives barely change, disappointment deepens. That can lead either to apathy or to explosive frustration.
Armenia today faces a contradiction: outwardly, it looks like a fast-growing, reform-oriented economy; inwardly, it remains a country where too many people survive at the edge of poverty, and where the future is being mortgaged through debt.
An honest conversation about public debt, budgets, taxes, and poverty is not an attack on the state. It is an attempt to return meaning to economic policy: public money must serve people, not statistics, and not political public relations.
Until this conversation happens publicly and seriously, the pattern will remain the same: rising debt, persistent poverty, and a growing bill that future generations of Armenians will have to pay for today’s glossy narrative.
By Lida Nalbandyan, Founder and CEO of Octopus Media Group