Thursday, March 14 2019 16:43

ArmInfo. The pawnshops and currency exchange offices operating in Armenia will be able to manage the increase in the annual state duty from the current 100 thousand  to 350- 370 thousand drams for pawnshops and up to 70 thousand drams  for "exchangers" against the current 50 thousand drams. "We'll not  draw more," said Aramais Khachatryan, chairman of the Union of  Currency Dealers of Armenia, after Assistant Prime Minister of  Armenia Nairi Sargsyan received the representatives of the field.

According to the representative of the interests of pawnshops Mher  Gevorgian, Sargsyan listened to their proposals, promised to discuss  the issue with all interested parties, and if necessary to report  also on the problem to the head of government. Nairi Sargsyan  promised to talk about the results of the discussions until Monday.

According to Gevorgyan, they do not exclude that the initiative of  the Armenian government is aimed at reducing the number of operating  pawnshops, and serves the interests of commercial banks. "We thought  about it, but today we don't want to make political statements. But  any sensible person understands that such decisions lead to the  consolidation of the market, that is, only large players will  remain," he said.

At the same time, as Khachatryan stated, today they are protesting  not against the Armenian Central Bank, the mega-regulator of the  financial market, but against the Armenian government represented by  the Ministry of Finance, which is the author of the draft law.  According to him, the representatives of the sphere were not involved  in the Ministry of Finance discussions as part of the development of  the draft law.

When asked whether it is possible that the government intends to  regulate the market of Lombard services due to its insufficient level  of transparency and a significant amount of shadow turnover, Mher  Gevorgyan stated that the sphere is controlled by the Central Bank,  which works "hard", but "good" and hide something from his gaze - is  impossible. Referring to the fact that the Central Bank exercises  financial control, but does not have the right to control the assets  of the same pawnshops where stolen goods can be sold, Gevorgyan  stressed that any stolen thing can be mortgaged in any financial  institution that has a license to issue loans. Recall that a week the  pawnbrokers and currency exchange offices are protesting against the  proposed changes to the Law on State Duty, suggesting a 60-fold  increase in state duty for pawnbrokers and currency exchange offices,  most of them will close and about 1,300 people will remain out of  work. According to the bill, instead of the current state duty for  pawnshops at 100 thousand drams (about $ 205) a bar will be set at 6  million drams (about $ 12.3 thousand), and for exchange points - 3  million drams (about $ 6.1 thousand) instead of the current 50  thousand (about $ 102). As noted, the adoption of the bill threatens  to close more than half of the 128 pawnshops and 200 exchange offices  operating throughout the country. As a result, more than 1,300 people  are waiting for reductions, and the state treasury's tax losses will  reach 900 million drams (about $ 1.8 million).

Owners and employees of pawnshops and exchangers also declare unequal  and unfair treatment of financial institutions - the state duty of  exchange offices owned by commercial banks will increase from 3  million drams to 7 million (2.3 fold increase), for universal credit  companies - to 3 million drams from the previous 500 thousand drams  (6-fold growth), and for pawnshops and currency exchange offices, a  60-fold increase in the tax burden is expected. The new regulations,  according to representatives of the sector, are aimed at withdrawing  small players from the market - lenders and currency dealers. At the  same time, they warn that this step will entail the formation of a  "shadow market", which will act out of sight of the Central Bank of  Armenia.

Meanwhile, according to financial analysts of ArmInfo, the measure to  which the Ministry of Finance wants to resort has quite serious  grounds.

First, the problem is the need to withdraw from , first of  all, uncontrollable from the point of view of tax payments, pawnshops  and private currency exchange points, the real turnover of which,  according to some estimates, repeatedly, and hundreds of times in  exchangers reporting figures.

Secondly: The current low thresholds for entering these segments of  the financial market do not justify themselves at all, since, in  contrast to fully accountable and tightly regulated regulations by  the Central Bank of banks and credit companies, pawnshops feel much  more at ease and as a "last resort" for desperate potential  borrowers, use inflated lending rates and less "attentive" to the  assessment of collateral.

Thirdly: the distribution of licenses by the Central Bank of Armenia  to too many pawnshops (127 according to 2018) and private currency  exchange points (213 for 2018) led to the fact that commercial banks  and credit companies began to noticeably lose their positions in the  market both in the credit and foreign exchange segments, while at the  same time incurring much greater obligations to the state as costs.

Therefore, analysts say, it is possible that in fact the government,  with a completely explainable silence of the mega-regulator  represented by the Central Bank of the Republic of Armenia, wants to  kill three birds with one stone: remove the unorganized, including  the gray market, the cash currency market, increase budget revenues  at the expense of state duties and other payments and to clear the  market for the work of commercial banks and credit companies, forcing  all players to work in a single competitive field.