Monday, December 1 2014 17:16
Business and Finance Consulting (Switzerland) to explore the possibility of developing agricultural insurance market in Armenia
ArmInfo. Next week, Business and Finance Consulting (BFC, Switzerland), which is the contractor of a number of international financial institutions, will prepare a due diligence on possible development of the agricultural insurance market in Armenia.
ArmInfo has been told by sources close to international organizations, the tender for exploration of the prospects of the agricultural insurance market was announced by the German KfW Development Bank in early 2014. The value of the tender was about 400 thsd EUR. Next week BFC specialists will arrive in Yerevan.
By ArmInfo's data, the exploration of the agricultural insurance market capacities will be carried out along with implementation of the USAID-funded program on expansion of the Armenian farming communities' access to lending resources.
To note, the problem of agricultural insurance has become especially topical over the past few years due to the rising risks in this field. Armenian insurance companies' portfolios almost lack this class of insurance, except for some cases of insurance of the processing plants' property. The problem has an essential impact on lending to the agrarian sector, including the farm enterprises, most of which do not apply to banks or credit organizations for loans, according to the surveys of Finance for Economic Development. Development of financial infrastructures in rural communities of the country implies creating specific financial tools that allow securitizing agricultural loans to facilitate the access of agricultural producers and farm enterprises to credit resources. High priority will be given to reducing the role of collaterals and decreasing the interest rates.
According to the bulletin "Financial Rating of Armenian Banks" prepared by the Agency of Rating Marketing Information (ArmInfo), as of 1 October 2014, the aggregate portfolio of agricultural loans of the banks totaled 128.9 bln AMD ($316.2 mln), with a 19.4% year-over-year growth and 13.6% over Jan-Sept 2014. However, according to the analysts, the share of overdue loans in the agriculture lending portfolio made up 8.4%, with the absolute value increasing by 12.2%. The banks boosted agriculture lending in 2011, following the Apr 2011 launch of the government program on subsidizing the interest rates of agriculture loans.
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