ARTSAKH AGENCY FOR DEVELOPMENT

Azat Artsakh – Nagorno Karabakh Republic [NKR]
28 June  05

By the decision No. 256 of the NKR government adopted on May 24,
2005 the Foundation for Development of Small and Medium-Size
Business was reorganized into Artsakh Agency for Development, a
state non-commercial organization. By the June 1 decree of NKR Prime
Minister Armen Avagian was appointed director of the agency. Azat
Artsakh talked to the newly appointed director on the existing and
future plans, the main activities of the agency and other related
issues. AA: “What are the objectives and activities of the Artsakh
Agency for Development?” A. Avagian: “Serious goals of economic
development are set before the Artsakh Agency for Development. The
goals of the agency are bolstering up economic development and
sustaining high rates of economic growth. To achieve this the agency
will implement a series of projects and activities, particularly,
business support, including financial, consultancy, information,
legal and other services, promotion of export of goods and research of
foreign markets, post-investment support, detection and elimination
of hindrances to business activities, training of specialists,
etc. Other important problems are fostering of economic relations,
business support services, enlargement of information capacities,
working out national investment programmes, improvement of the
legislation for economic development, creation of legislation for
mortgage loan, etc.” AA: “Recently it has been often stated that loans
do not reach many businesses (especially in rural areas) because of
the conditions of collateral. Whereas it is the inhabitants of rural
areas that loans should reach. What is the real picture?” A. Avagian:
“First of all, I must say that the loan programme is implemented
together with Artsakhbank; a contract has been signed by which our
agent bank assumes the loan risk, therefore the latter is eligible to
decide the questions related to loan security (including specifying
the collateral). The step was correct and effective for thus full
repayment of loan resources is ensured to re-direct these sums at
continuation of the programme. As to the low involvement of the rural
businesses in the loan programme, I would say the contrary. Since
the establishment of the foundation about 900 million drams has been
lent from the state budget to small and medium-size businesses (127
business plans), of which 500 million drams went to rural businesses
(90 business plans). This was achieved due to the application of more
effective mechanisms of implementation of the loan programme. At the
same time, in order to sustain the level of loan resources directed at
the rural areas, the agency will work out and implement a programme
of loan securities in the near future, which will enable funding
the applicants who do not have anything to supply as collateral. AA:
“What programmes on mortgage loan do you have?” A. Avagian: “One of
the upcoming activities of the agency will be the introduction of the
mortgage loan which is of great social importance. This programme is
important both from the point of view of improvement of quality of life
but also economic development. In the near future the legislation on
mortgage lending will be worked out.” AA: “How is the state programme
of small and medium-size business support implemented and what outcome
has there been so far?” A. Avagian: “The state programmes of small and
medium-size business support have been implemented since 2003. The
NKR government has had serious achievements in this sphere. These
programmes are mainly loan programmes, the implementation of which will
enable creating new industries and jobs. It should be mentioned that
an effective mechanism of implementation of the state loan programme
was developed in a short period of time, a series of problems related
to specifying the spheres of economy, loan size, as well as reduction
of risk were solved, which enable to better organize the procedure
of loaning. In the framework of loan programmes, as I have already
mentioned, 127 business plans have been funded, and as a result 500
jobs were created. The agency carries on the state programme for small
and medium-size business support for 2005. It is larger in scope than
the programme for 2003-2004. The 2005 programme provides for a total
of 785 million drams of loan resources, which is a considerable sum
for the NKR economy. By sustaining this rate of lending, in the near
future the government may gain strong leverages on the NKR financial
market, balancing the supply and demand for loan resources, spurring
the reduction of interests on loans by loan companies. In the current
year more rational and effective mechanisms of allocation of loan
resources have been introduced. The programme is also important as
it is specifies the spheres to which the loans will be directed.
Assuming the development of agriculture as a priority, about 80
per cent of the loan resources, totaling about 600 million drams,
were directed at the development of winegrowing, cattle breeding
and purchase of agricultural machinery. This kind of approach can
be also characterized as a social programme, because in this case it
enables to render the results of the loan programme more tangible for
many businesses, particularly farmers. This is an unprecedented step
of purchase of agricultural machines. The mentioned programme will
provide high-level agricultural machinery services in rural areas
at lower prices. It should be mentioned that modern harvesters to be
acquired will enable harvest of arable crops with minimum losses, as
well as increase crop yield and profitability of farming. In the end
I want to say that through the accurate determination of priorities
among the programmes for economic development and social programmes
the agency will be able to sustain high rates of economic growth,
as well as to solve a number of social problems..

AA.
28-06-2005

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