WB PROVIDES $50MLN TO ARMENIA TO ENSURE ACCESS TO FINANCE FOR SMB
ARKA
Apr 1, 2009
YEREVAN, April 1. /ARKA/. The World Bank (WB) has provided $50mln
to Armenia under a program of access to finance for small-to-medium
businesses (SMB).
Vice-Chairman of the Central Bank of Armenia (CBA) Vache Gabrielyan
reported that formerly Armenia was mainly receiving financial
assistance from the WB International Development Association (IDA).
"However, consistent economic growth and development have deprived
Armenia the right to IDA funds as the country is among higher-income
countries now," Gabrielyan said. He pointed out that , under the
agreement, Armenia will receive the first credit on the WB-set terms –
the repayment period is 26 and a half years, the grace period being
five years.
Gabrielyan said that the CBA will borrow the funds and distribute
them among the Armenian commercial banks: Conversebank, VTB Bank
(Armenia), ACBA-Credit Agricole Bank, HSBC Bank Armenia, ProcCredit
Bank, Ardshininvestbank, Armeconombank and Araratbank.
The CBA Vice-Chairman pointed out that the interest rates on credit
will depend on the risk of specific programs. He said that the banks
themselves will assess the risks and set individual credit margins. He
also said that the CBA will issue credits to the commercial banks
at an annual interest rate of 8-9 per cent, and the banks’ annual
interest rates will be 15% and over.
"Th e SMB program is a component of the Armenian Government’s
anti-crisis program. The credit was received in a record space of
time – five months," Gabrielyan said.
According to him, the program of access to finance for SMB is a
step to higher-level cooperation with the WB. He pointed out that
the program is also a significant step in the implementation of the
Armenian Government’s anti-crisis measures.
Gevorg Tumanyan, Executive Director of the Program Management Unit,
German-Armenian Fund (GAF), said that the programs implemented by
the WB and the KfW Bank (Germany) aimed to support SMB have much in
common. However, they are different in some aspects.
Specifically, under the KfW programs the commercial banks received
funds as advance payment, whereas the WB will apply the refinancing
principle.
"The banks involved in the program will issue credits to SMBs after
which the information on the credit will be verified as meeting the
WB requirements. Only after that will the credits be refinanced,"
Tumanyan said.
He also pointed out that companies with a restricted number of
employees were regarded as small-to-medium businesses under the KfW
programs, whereas the enterprises having an annual turnover within
500mln AMD are considered such under the WB programs.
One more difference is credits are issued only in AMD terms under the
KfW programs, whereas the WB programs do not rule o ut foreign-exchange
credits.