Armenia`s government to provide AMD 6bln guarantees to agricultural producers

ArmInfo. The RA government will subsidize interest rates on additional loans attracted by purchasing companies in order to successfully organize the purchase of agricultural products in 2024.

The decision to this effect was made at a meeting of the Cabinet of Ministers on August 1. As RA Minister of Economy Gevork Papoyan noted in his speech, the current program has made it possible to attract additional financial resources for the purchase of agricultural raw materials, and, in particular, grapes, since 2021. For companies purchasing fruit and vegetable products, in 2023 it was allowed to attract additional loans for the purchase of containers for their packaging. With the amendments to this program, the country's Cabinet of Ministers will provide state guarantees of up to 50% from August 1 to December 30 of this year. In other words, a business entity wants to attract a loan of 2 billion drams to purchase raw materials, but it has collateral of 1 billion drams, so the state will pay interest rates on this 1 billion drams.

Papoyan noted that the application of the program did not reveal any problems in the period from 2021 to 2023. The Minister expressed confidence that there would be no problems this year either. In 2021, the RA government provided guarantees to 9 organizations in the amount of about 5.4 billion drams, of which 4.1 billion drams were provided to 7 organizations purchasing grapes for a period of 2 years, and 1.3 billion drams to 2 organizations purchasing fruit and vegetable products with a repayment period of 1 year. For 2022, budget guarantees were provided to 9 organizations in the amount of 5.3 billion drams, of which 8 organizations purchasing grapes in the amount of 5.1 billion drams for a period of 3 years and 3 months and 1 organization purchasing fruits and vegetables in the amount of 200 million drams with a repayment period of 1 year and 3 months. In 2023, 3 grape procurement organizations were provided with budget guarantees in the amount of 2.7 billion drams with a repayment period of 3 years and 9 months. All these obligations were fulfilled on time. Using the budget guarantee instrument, as a result of attracting additional credit funds, it was possible to ensure the procurement process of agricultural raw materials, in particular grapes, for 2021-2023.

In order to ensure the grape procurement process for the current year, the estimated amount of the budget guarantee is estimated at up to 6 billion drams, based on the value of contracts concluded for the purchase of grapes before July 1 of the current year, within the framework of which beneficiaries can use the program.