Monday, April 1 2019 13:39

ArmInfo.Deputy Prime Minister Tigran Avinyan does not have such unambiguous attitude towards the activities of pawnshops. He stated this in an interview with  reporters.

According to Avinyan, the solutions proposed by the Ministry of  Finance for "pawnshops" and "exchangers" within the framework of the  draft amendments to the Tax Code will pass another stage of  discussions already in the National Assembly of Armenia. "I think if  new arguments are heard in the National Assembly about the"  terrifying and frightening "reasons why the state duty for them  should not be increased, the parliament will make a decision itself,"  he said.

At the same time, according to Avinyan, the scope of pawnshop  activities requires, at a minimum, very high quality control. "In  general, the nature of the Lombard business in the public plan is not  perceived very positively," Deputy Prime Minister said.

To recall, pawnshops and currency exchange offices are protesting  against the proposed changes to the law "On State Duty", which  implies a 60-fold increase in state duty for pawnshops and currency  exchange offices. The owners of these organizations believe that as a  result of their business will be closed, about 1.300 people will  remain out of work.

Owners and employees of pawnshops and exchangers also declare unequal  and unfair treatment of financial institutions. Thus, 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 private exchange points - up to 3  million drams (about $ 6.1 thousand) instead of the current 50  thousand (about $ 102). The state duty for exchange offices owned by  commercial banks will increase from 3 million drams to 7 million (a  2.3-fold increase), for universal credit companies - to 3 million  drams from the previous 500 thousand drams (6-fold growth). 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, which is still not responding to this  governmental initiative.  

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 <shadows>,  first of all, pawnshops and private currency exchange points that are  not controlled from the point of view of tax payments, the real  turnover of which, according to some estimates, is many times higher  than the reported ones numbers. Secondly: The current low entry  thresholds for these segments of the financial market do not justify  themselves completely, since pawnshops feel much more at and tightly  regulated by the Central Bank and credit companies, pawnshops feel  much more at ease and as a "last" authority 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 on credit and on its  currency segments, while incurring much greater organizational costs  and obligations to the state. Therefore, analysts say, it is possible  that in fact the government, with the silence of the mega-regulator  represented by the CBA, wants to kill three birds with one stone:  remove the unorganized and unaccountable gray currency market from  the shadows, increase revenues to the budget through state duties and  other payments and clear the market for the work of commercial banks  and credit companies, forcing all players to work in a single  competitive field.