External Public Debt by Currency

Notes:

The Government issues domestic and external debt guarantees. As of 31 December 2014, the total amount outstanding under Government domestic debt guarantees was U.S.$2.1 million in respect of a loan from “HSBC Bank Armenia” CJSC to “Tamara Fruit” CJSC. As of 31 December 2014, the total amount outstanding under Government external debt guarantees was U.S.$149.9 million. All of the external debt guarantees outstanding as of 31 December 2014 consisted of Government guarantees in respect of loans provided by official creditors, such as the IBRD, ADB and KfW, to the CBA. These external guarantees are reflected as External Public Debt of the CBA.

The following table sets forth certain statistics regarding Armenia’s total external debt, including Public External Debt as well as private sector external debt:

Notes:

(1) Includes Public External Debt and private sector external debt.

Borrowings by domestic banks and credit organisations represent the largest component of private sector debt, constituting approximately 51.7% of outstanding private sector debt as of 31 December 2013 and 50.9% of outstanding private sector debt as of 30 September 2014.

The following table sets forth the total Public Debt service for the periods indicated:

Note:

The following table sets forth the projected total principal service payments on External Public Debt by type of creditor for the periods indicated:

Notes:

The following table sets forth the projected total interest service payments on External Public Debt by type of creditor for the periods indicated:

Notes:

(1) The table reflects contractual payments of existing obligations as of 31 December 2014. Therefore, it does not include any borrowings or prepayments of External Public Debt by or on behalf of the Government or the CBA since 31 December 2014, including the issuance of the Notes.

(2) Foreign currency values of outstanding External Public Debt have been converted into dollars at the relevant market exchange rates prevailing at the end of the indicated period.

In 1997, Armenia and Russia concluded an agreement under which four sovereign loans extended by Russia to Armenia between 1992 and 1994 were restructured. The total amount outstanding under these loans at the time of restructuring was U.S.$73.7 million, all of which was repaid as of 29 January 2004.

In 2002, Armenia and Russia concluded an agreement under which five sovereign loans extended by Russia to Armenia between 1994 and 2000 were restructured. The total amount outstanding under these loans at the time of restructuring was U.S.$93.8 million. By January 2004, Armenia settled the full amount of this debt by transferring equity stakes in five Armenian state-owned companies to Russia.

Turkmenistan

In 1996, Armenia and Turkmenistan concluded an agreement which restructured Armenian debt for gas supplied by Turkmenistan in 1994 and 1995. The total amount outstanding at the time of restructuring was U.S.$34.0 million. In 2000, Armenia and Turkmenistan entered into a second agreement which restructured the remaining U.S.$12.8 million of debt in respect of these gas supplies. All amounts were fully repaid as of 2 December 2003.

In 1998, Armenia and the EU signed a loan agreement that restructured ECU51 million of overdue Armenian debt to the EU. The ECU51 million in funds were provided to Armenia in 1992 and 1993 within the framework of an ECU58 million loan agreement providing for the purchase and import into Armenia of agricultural products and medical supplies. Pursuant to the restructuring, the EU agreed to convert ECU30 million of the overdue debt into grants and to reduce the amount outstanding under the loan to ECU28 million, which amount was prepaid between 1999 and 2005.

Armenia became a member of the World Bank in 1992. Armenia’s partnership with the World Bank has focused on, inter alia, achieving sustained economic growth, fostering development of the private sector, improving social services and protecting Armenia’s environment. Since the inception of the World Bank’s programmes in Armenia, the World Bank has approved 89 public sector projects (of which 66 are IDA projects and 23 are IBRD projects) totaling approximately U.S.$2.1 billion.

Armenia’s borrowing from the World Bank has been mainly on concessionary terms through the IDA. As of 31 December 2014, the total amount of External Public Debt owed to the World Bank in respect of IDA loans was U.S.$1,198.4 million. In 1992, Armenia became eligible for IBRD borrowing. As of 31 December 2014, the total amount of External Public Debt owed to the World Bank in respect of IBRD loans was U.S.$410.8 million.

Armenia became a member and shareholder of the International Finance Corporation (the “IFC”) in 1995. Since that time, the IFC has invested approximately U.S.$320 million in 52 projects across a range of sectors, including financial markets, manufacturing and mining, and has assisted in securing an additional U.S.$23 million from other lenders.

The Government considers small- and medium-sized enterprise development, public administration reforms and infrastructure development as priority areas for further World Bank cooperation.

IMF

Armenia became a member of the IMF in 1992. Funds received from the IMF are held by the CBA to manage Armenia’s international reserve position and by the Government to support Armenia’s budget. As of 31 December 2014, the total amount owed to the IMF was U.S.$442.1 million, of which U.S.$290.1 million are payable by the CBA and U.S.$152.0 million by the Government.

In 2010, the IMF approved a blended Extended Fund Facility (“EFF”) and Extended Credit Facility (“ECF”) in for SDR266.8 million (the “2010 EFF/ECF Arrangements”). Armenia has drawn down the full amount of the 2010 EFF/ECF Arrangements, having received the final installment of SDR55 million in June-July 2013 following the IMF’s sixth and final review under the programme. Since 1992, Armenia has drawn down a total of SDR492.9 million under various EFF/ECF arrangements, including the amounts received under the 2010 EFF/ECF Arrangements. Standard terms for EFF/ECF loans are as follows: a ten-year maturity period with a 4.5-5.5 year grace period (during which the borrower pays only interest), a variable interest rate for EFF loans and a fixed interest rate of 0.5% per annum for ECF loans. In March 2014, the IMF approved a 38-month EFF facility worth SDR82.21 million (approximately U.S.$127.6 million) aimed at supporting the domestic economy, reducing poverty, stabilizing inflation and reducing certain macroeconomic vulnerabilities. To date, Armenia has withdrawn SDR23.5 million under this new facility, which is subject to semi-annual reviews. As of 31 December 2014, the total amount of debt outstanding under Armenia’s EFF and ECF arrangements was SDR299.1 million.

ADB

Armenia became a member of the ADB in 2005. To date, Armenia and the ADB have entered into 14 public sector projects for a total amount of approximately U.S.$690 million. The ADB has focused its investments on transportation infrastructure, water supply and sanitation projects and energy project, while also extending to Armenia several crisis-recovery loans in 2009 and budget support loans in 2013 and 2014. Loans from the ADB are provided on concessional terms through the Asian Development Fund (the “ADF”) and also through Ordinary Capital Resources (“OCR”). As of 31 December 2014, the total amount of ADF-funded External Public Debt was U.S.$272.1 million, and the total amount of OCR-funded External Public Debt was U.S.$39 million.

In 2011-12, the EU provided to Armenia macro-financial assistance in the form of budget support in an aggregate amount of €100.0 million, of which €65.0 million was extended in the form of a loan and €35.0 million in the form of a grant. The loan was provided in two tranches (€26 million in 2011 and €39 million in 2012), both of which are to be repaid in 2026. The grant was also provided in two tranches (€14 million and €21 million, both provided in 2011). As of 31 December 2014, the total amount of External Public Debt owed to the EU was U.S.$79.0 million.

In November 2014, Armenia signed a memorandum of understanding with the EU, launching the Single Support Framework for EU-support to Armenia, which sets out the strategic objectives and priorities for EU-Armenia cooperation through 2017. The memorandum of understanding contemplates €140-170 million in EU financing in the priority areas of private sector development, public administration and justice. Also, in November 2014, Armenia and the EU entered into a financing agreement, whereby the EU has agreed to provide €25 million in support to Armenia’s agriculture sector in 2015-2020. To date, no amount has been disbursed under the financing agreement.

IFAD

To date, Armenia and the IFAD have entered into seven public sector projects for a total amount of approximately U.S.$90 million. IFAD primarily invests in Armenia’s agricultural sector. As of 31 December 2014, the total amount owed to IFAD was U.S.$62.9 million.

To date, Armenia and OPEC have entered into four rural and agricultural development projects for a total amount of U.S.$49 million. As of 31 December 2014, the total amount owed to OPEC was U.S.$34.5 million.

Most of the EBRD assistance to Armenia since 1991 has consisted of private sector investments, which are not included in the definition of Public Debt under the Law on State Debt. To date, Armenia and the EBRD have entered into nine public sector projects for a total amount of U.S.$132.5 million. EBRD’s investments in the public sector of Armenia have focused mainly on projects to improve the environment and transportation infrastructure. As of 31 December 2014, the total amount of Public Debt outstanding to the EBRD was U.S.$21.3 million.

Armenia entered into a framework agreement with the EIB in 2008. In 2010, the EIB launched its first project in Armenia, which is focused on reconstructing the Yerevan Metro. Total investment in the project amounted to U.S.$6.5 million. As of 31 December 2014, the total amount outstanding owed to the EIB was U.S.$44.6 million, up from U.S.$22.1 million as of 31 December 2013 and U.S.$6.6 million as of 31 December 2012. The significant increase in debt owed to the EIB reflects new EIB projects in connection with border-crossing and infrastructure projects, particularly in the water and road transport sectors.

Armenia officially joined the EEU in January 2015. See “Risk Factors—Risk Factors Relating to Armenia—Relations with Russia.” To date, no loans or grants have been extended to Armenia under the auspices of the EEU. However, it is expected that Armenia will receive two grants (U.S.$47 million and RUB130 million) to support the country’s integration into the EEU.

The issue of the Notes is authorised pursuant to The Law of the Republic of Armenia on the Securities Market, which was approved by the President of Armenia on 20 October 2007 and subsequently amended on 12 November 2012. A fiscal agency agreement dated ● 2015 (the “Fiscal Agency Agreement”) will be entered into in relation to the Notes between the Republic of Armenia (“Armenia”), acting through the Ministry of Finance of Armenia (the “Issuer”), Citibank, N.A., London Branch as fiscal agent, registrar, transfer agent and paying agent and Citibank, N.A., New York Branch as New York paying agent and transfer agent. The fiscal agent, the paying agents, the transfer agents and the registrar for the time being are referred to below respectively as the “Fiscal Agent”, the “Registrar”, the “Transfer Agents” and the “Paying Agents” (which expression shall include the Fiscal Agent). The expression “Paying and Transfer Agents” shall include the Paying Agents and the Transfer Agents

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