Thursday, June 29 2017 17:47
Naira Badalian

Since 2018, agricultural loans in Armenia will be issued under milder conditions

Since 2018, agricultural loans in Armenia will be issued under milder  conditions

ArmInfo. Since 2018, agricultural  loans will be issued in Armenia under milder conditions. Answering  the question of ArmInfo, Armenian Minister of Agriculture Ignaty  Arakelyan stated on June 29 after the government session.

According to the minister, the issue of granting agricultural loans  to farmers on more affordable terms has already been discussed with  representatives of the banking sector. The Ministry of Agriculture,  as the head of the ministry noted, is aimed at developing a program  that will help consolidate small and medium-sized farms and create  conditions for the development of the agrarian sector.

The head of the Ministry of Agriculture denied the information that  the subsidizing of the interest rate on agricultural loans is  temporarily frozen and now all the burden is borne by banks. Simply  for today, as he noted, the first stage on subsidizing has come to  the end. The second stage of subsidizing starts in July. At the  moment, the Ministry of Agriculture is reviewing the program items,  in particular, the preconditions are being revised to increase their  accessibility.

As of today there are no specifics in terms of the proposed changes.  Nevertheless, as Ignaty Arakelyan assured, the process promises to  become more pleasant for farmers, and the provided agricultural loan  is more lenient. "The total amount of funds allocated by the Armenian  government to subsidize interest rates on agricultural loans will be  maintained, and it is possible that the size of subsidies will  increase, which will allow reducing rates," he explained.

As ArmInfo reported earlier, the Armenian government will allocate  1,100 million AMD for subsidizing the interest rate on agricultural  loans from April 1 to December 31, 2017. According to the Ministry of  Agriculture, in 2011-2016 the country's farms were given 119.4  thousand available agricultural loans for 99.1 billion AMD (about $  203 million). The subsidized amount was about 4.7 billion AMD. In  2011-2014 subsidies accounted for 4% (out of 14%) for ordinary  farmers and 6% for residents of the 225 most disadvantaged (in terms  of climate and yield) villages. And since 2015, a subsidy of 6% is  given to all farmers participating in the state program. In general,  in 2016, loans were granted in the amount of 15 billion AMD - in two  stages of 7.5 billion AMD - for spring and autumn field work, about  20.4 thousand farmers, out of which the subsidized amount was 1163.0  million AMD.

To recall, the program to provide farmers with preferential  agricultural loans was adopted on April 1, 2011.  Financing was  carried out at a rate of 14% per annum, of which 4% of the loan  amount was subsidized by the state, and in border villages - 6% with  a grace period of 6 months. Crediting was conducted in AMD, and the  average loan size was 625 thousand AMD. In 2015, the government  decided to increase the amount of subsidies to 3 million AMD for a  period of 2 years. The size of the subsidy was 6% of the agricultural  loan rate, due to which the villagers could attract agricultural  loans at a rate of 8% per annum.

According to the Financial Rating of the Armenian Banks as of January  1, 2017, prepared by IC ArmInfo, ACBA-CreditAgricole traditionally  leads the portfolio of agricultural loans - in the credit portfolio  of the bank, over 37% account for this sphere. In the total  agricultural credits of the banking system, the share of  ACBA-CreditAgricole Bank dominates - over 52%. But the bank is not  limited to the agricultural sector, actively financing such areas as  SMEs, industry and trade, public catering and services, while being  leaders and retail lending. "ACBA-CreditAgricoleBank" CJSC has been  operating in Armenia since 1995. Since September 2006, the largest  European bank group CreditAgricole S.A. is the majority shareholder  of the bank. With a 15.56% interest in the capital, followed by the  participation of SJSC "SacamInternational" (member of the  CreditAgricole S.A group) - 12.44%, along with which there are 10  regional Unions of Peasant Mutual Assistance (SLE) in the capital. In  terms of coverage of the branch network, the bank is included in the  TOP-5, and by the number of regional branches - in the top three.

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