Armenia`s government to support domestic metallurgic companies 

ArmInfo.On March 20, the Armenian  government approved a program to promote the domestic sale of certain types of goods of Armenian origin, for which restrictions have been imposed on their export from the Republic of Armenia. Manufacturers  of metal products from local raw materials will be able to count on a  subsidy of 10 thousand drams for each ton sold.

As stated in the explanatory note to the document, the decision was  made due to the reduction of risks associated with the liquidity of  goods of strategic importance for the Republic of Armenia (ferrous  and non- ferrous metals and products made from them), the expansion  of the production chain in the Republic of Armenia, stimulation of  the production of more complex products by local metallurgical and  metalworking enterprises, expansion of production volumes, ensuring  economic growth and increasing the level of employment.

The authors of the support program, represented by the Ministry of  Economy, recalled that in February 2024, the Parliament adopted  amendments to the RA Law , which provide for the  definition of activities for the export of certain types of simple  products made of ferrous and non-ferrous metals, considered  semi-finished products, subject to licensing, and the collection of  state duty for issuing licenses. It was noted that as a result of the  above, metallurgical and metalworking enterprises will be interested  in switching from simple ingots to the production of products with  higher added value. To this end, local companies plan to deepen metal  processing, producing profiles, wire, aluminum radiators, and  fittings from the resulting ferrous metal castings, the export of  which is exempt from state duty.

Considering that the Law comes into force on January 1, 2025,  companies in the sector expressed concern that the implementation of  the law will create financial difficulties for them, since they are  not yet ready to export more complex products as a result of their  investments.

There are already enterprises that have been able to ensure the  implementation of the first and second stages of production, but  there are also those that have not yet been able to ensure the full  production chain.  Therefore, the Ministry of Economy admitted that  those economic entities that are not yet ready to ensure the 2nd  stage of production and could sell their products outside the  Republic of Armenia at a higher price, but based on the provisions of  the Law, it is no longer economically profitable for them to export  these products, may suffer serious economic losses, up to the  termination of their activities. 

This Project is aimed at providing assistance to these economic  entities at the initial stage so that they do not suffer as a result  of the adoption of the Law. At the same time, it should be noted that  during this period, these economic entities will generate revenues to  the state budget of the Republic of Armenia in the form of VAT and  other taxes, which in total will exceed the amount of support  provided.

Thus, when local enterprises sell the goods specified in the Project  for processing on the domestic market, the state will subsidize them  in the amount of 10 thousand drams for each ton sold.

, - the authors of the initiative noted.

According to statistics, about 60,000 tons of the goods specified in  the project are sold in the Republic of Armenia. Considering that the  program will come into force no later than March, 50,000 tons will be  produced by the end of the year, and with a payment of 10,000 drams  for each ton, the annual support volume will be 500 million drams.

According to statistics, 5-7 thousand tons of the products specified  in the project are sold in the Republic of Armenia every month, and  the subsidy for each ton will be 60-84 million drams per month. But  as a result of processing the same 5-7 thousand tons, taxes in the  amount of 60,000-70,000 drams for each ton will go to the state  budget, the Ministry of Economy assured.