IFC`s $ 15 million loan to INECOBANK aims to support MSMEs to resist  COVID-19 challenges

ArmInfo. IFC, a member of the  World Bank Group, is providing a loan of $15 million to Inecobank to  boost lending to Armenia's micro, small, and medium enterprises  (MSMEs), helping them address the challenges triggered by the  COVID-19 outbreak., the press service of IFC reports.  Given the  global pandemic, many MSMEs in Armenia face lower revenues, higher  costs, supply disruptions, and complicated inventory management. As a  result, they need working capital liquidity financing to continue  operating, providing vital employment, goods and services, and  generating tax revenues. IFC's loan to Inecobank, its longstanding  client in Armenia, is part of its $8 billion fast-track financing for  its private sector clients worldwide, to sustain economies and  protect jobs during this unprecedented global crisis. 

"Since the COVID-19 outbreak we have implemented an individual  support system for our MSME clients that have been impacted by the  situation," said Aren Naltakyan, CEO of Inecobank. "In view of this,  the cooperation with IFC and provision of funds will confidently  support our clients from vulnerable sectors." 

The COVID-19 crisis has prompted a drop in international copper  prices - one of Armenia's largest exports - impacted tourism,  disrupted transport connections, and dampened growth prospects in the  country's main trading partners, Russia and Europe. MSMEs, a vital  part of Armenia's economy, contribute approximately 40 percent to the  country's Gross Domestic Product (GDP) and 30 percent to the  employment, will need support to overcome the difficulties.  Jan van  Bilsen, IFC Regional Manager for the South Caucasus, said: "Based on  lessons learned globally, MSMEs are particularly vulnerable to  systemic crises. Keeping them solvent is key to preserving jobs and  limiting the economic damage. Our financing will help Inecobank's  business with MSMEs sustain operations, recover faster, and create  jobs, thereby strengthening their resilience and accelerating  economic recovery after the pandemic." 

To note, IFC altogether sent about $ 700 million to Armenia to  implement programs mainly in the sectores of energy, finance, real  estate, and production. Globally, IFC, helping the private sector in  more than 100 developing countries, provided over $ 19 billion to  private companies and financial institutions in fiscal 2019 to build  capacity to thrive.

To recall, INECOBANK has been operating in the Armenian market since  October 1996. In December 2016, ProCredit Bank merged with INECOBANK,  and as part of this process, an institutional investor represented by  EBRD was attracted to capital, which four years later, in the first  quarter of 2020, withdrew from the capital. Taking this into account,  the share participation of the majority shareholders of INECOBANK as  of June 1, 2020 is as follows: Baloyan Avetis - 38.1%, Safaryan Karen  - 32.95%, and the share of investment funds agRIF Cooperatief U.A.   (Belgium) and DWM FUNDS S.C.A.-SICAV SIF (Luxembourg) did not change,  amounting to 10.01% and 5.1%, respectively.