Since launch of subsidizing program average y-o-y growth in agriculture has totaled 10%

ArmInfo. Budgetary expenditures on subsidizing interest rates of agricultural loans will total 15 bln AMD (as in 2015), which will be provided in two tranches: 7.5 bln AMD for spring field work and 7.5 bln AMD for autumn field work, Head of the Agricultural Programs Development Department of the Ministry of Agriculture Hrachya Tspnetsyan told ArmInfo's correspondent.

According to him, about 20 thousand affordable loans will be provided and all the representatives of agrarian sector may apply for them. "As a rule, 75% of the applications are fulfilled", Tspnetsyan informed.  Since 2011 average y-o-y growth in agricultural field has totaled 10% and these indicators have been ensured largely due to implementation of program on subsidizing interest rates of agricultural loans.

As the representative of the ministry informed, in 2011 when the program was launched the growth of the field totaled 13.9%, in 2012-9.5%, in 2013, 2014 and 2015-7.1%, 7.2% and 11.7% respectively. 4.5% growth is forecasted in 2016. The Ministry of Agriculture does not conduct statistics on the number of successful loans and does not have information about the share of problematic loans. However, as Tspnetsyan noted Office of Implementation Program of Economic Development of Rural Territories under the Armenian government conducts permanent monitoring of the purposefulness of the provided loans. "If before 1 or 2 cases of non-purposeful use of provide loans were registered, currently there are no such cases", Tspnetsyan stated. According to him, despite the fact that the field of agriculture is related to many risks these risks are minimized by the government's guarantees and very beneficial terms of lending. At the same time the Head of the Department states that there are cases when the farmers apply to the Ministry with a request to delay payments on the loans. "In every case we have individual approach and jointly with the bank try to support the farmer enterprises. Last year there were no more than a dozen of such cases", Tspnetsyan informed.

He also informed that if in last years several credit organizations had participated in the program, since last year ACBA-Credit Agricole Bank gave 96-97% of all the subsidized loans.

To recall, the state program for subsidizing interest rates of agricultural loans launched in Armenia in April 2011. Loans under this program are provided at 14% annual interest rate from which 4 (6% for borderline villages) are subsidized by the government. Loans were given in Armenian dram and the average sum of the loan was 625 thousand AMD.  At the same time grace period totaled 6 months. In 2015 the government made a decision to increase the amount subsidizing to 3 mln AMD for a 2-year term. The subsidizing totaled 6% from the total rate of agricultural loan due to which farmers can apply for loans with 8% annual interest rates. In 2011-2015 nearly 99 thousand affordable loans were given to Armenian farm enterprises, amounted to 84.2 bln AMD with 14% annual rate, from which the government subsidized 3.56 bln AMD. In 2015 alone 15.2 bln AMD was subsidized and 21.5 thousand affordable loans were provided.

According to the Financial Rating of Armenian Banks, prepared by ArmInfo, agricultural loans portfolio reached 164.5 bln AMD as of January 1, 2016 (more than 340 mln USD) with 18.3% year-over-year growth (versus 22.6% growth in 2014). ACBA-Credit Agricole Bank accounts for more than 50% of the total agricultural finance by the banking system of Armenia as of January 1, 2016.  As this bank is mainly specialized in agricultural crediting, the share of these loans in its credit portfolio reaches almost 40%.