ArmInfo. Agricultural risk insurance will definitely have a positive impact on the development of the agricultural sector of Armenia and on agricultural lending. This opinion was expressed on February 14 by Chairman of the Union of Banks of Armenia (UBA), Chairman of the IDBank Board Mher Abrahamyan, answering a question from ArmInfo.
He said that for 2019 the growth of agricultural loans was in the range of 10-12%. "I still find it difficult to say how much the growth of agricultural lending will accelerate after the full use of agricultural risk insurance, since agricultural insurance is still in pilot mode. Accelerating lending growth will depend on the speed and volume of agricultural insurance implementation and the level of mass use," M. Abrahamyan noted.
In addition to the above, UBA Executive Director Seyran Sargsyan drew attention to the fact that the full implementation of agricultural risk insurance will affect not only lending volumes, but interest rates. "In other words, risk insurance will lead to lower rates. And in terms of demand, I think that there will be no significant effect. I note that all banks are engaged in agricultural lending without exception. And activity in this segment is supported by several state programs for subsidizing agricultural loans," S. Sargsyan noted . It should be noted that, according to the Central Bank of the Republic of Armenia, growth in the volume of agricultural lending in the banking system of Armenia accelerated in 2019 to 11.1% from 3.6% in 2018, amounting to 151.3 billion drams or $ 315 million (the Central Bank publishes data only for residents - Ed. note). In the total loan portfolio the share of agricultural loans in the banking system has decreased over the past 3 years from 6.7% to 4.7%. According to the data of the Statistical Committee of the Republic of Armenia, in 2019, the agricultural sector lingered in recession, slowing down to 4.2% from 7.6% in 2018, providing a volume of 852.8 billion drams ($ 1.8 billion).
