Armenia is reviewing program to subsidize interest rates on loans  to procurement companies

ArmInfo.The Ministry of Economy of Armenia is making certain changes to the program of subsidizing interest rates on loans issued for the purchase of agricultural raw  materials.  

"If in previous years we said that we give loans at a  zero interest rate, that is, we subsidize completely, now we simply  indicate the amount subsidized by the state. 14% for companies in  border areas, and 10% for companies in Yerevan and non-border areas.   That is, if a loan is issued at 12-13%, we will subsidize 10%, and  again we will get a preferential loan," Armenian Minister of Economy  Vahan Kerobyan said on April 15 at a government meeting.

In addition, according to the minister, the state guarantees up to  50% of the total loan amount issued to buyers, which will allow them  to make larger purchases if necessary. The upper limit of the loan is  4 billion drams. The government has also developed model terms and  conditions for procurement contracts and sample forms to avoid  possible problems in the procurement process this year.

Kerobyan touched upon the problems between farmers and procurement  companies. "The problem is that usually the producers are interested  in concluding contracts half an hour before the purchase, which is  not a contract, but a receipt. This puts the villagers in a  vulnerable position, in terms of predictability - they do not know  whether the products will be purchased or not," the minister said. In  this regard, the government decided to subsidize only those loans of  companies that will be concluded before June 1 (for vegetables,  gourds and other crops) and before July 1 (for grapes). "I call on  all the purveyors follow the example of the Yerevan brandy factory,  which has ten-year contracts. And to give farmers confidence  regarding the volume and price of purchases," the head of the  Ministry of Economy said.

The government also made changes to the existing exporter loans. "You  know that exporters have certain problems, in particular, with  exports to Russia. In March, we had a significant decline in exports.   Because of this, exporters recorded a gap in cash flows, and by this  decision we allow banks to provide exporters with an additional  six-month preferential period," Kerobyan concluded.