Armenian Banks Have Dram Liquidity Problems

ARMENIAN BANKS HAVE DRAM LIQUIDITY PROBLEMS

ARKA
June 11, 2009

YEREVAN, June 11. /ARKA/. Armenian banks have problems with dram
liquidity, said RA Prime Minister Tigran Sargsyan.

According to him, the Armenian banking sector is showing most sound
liquidity now – US $700-800mln are on accounts at commercial banks.

However, the Premier said, with high liquidity requirements ensured,
borrowers do not show demand for USA credits. "They all want AMD
credits, while banks are reluctant to issue AMD credits," Premier
Sargsyan said at his meeting with Armenian businessmen in Moscow.

In this context he pointed out that the real economic sector is
encountering the crisis-caused difficulties, which means a high rise
in risks over the last 18 months.

"This means that commercial banks are assessing the risks and are
behaving logically by raising interest rates. On the other hand,
to survive the crisis, the real; sector needs cheap long money,
but commercial banks are not ready for this behavior," he said.

The Armenian Premier said that surviving the crisis requires the
interference of the Government, which is supposed to assume the risks.

"We have to think of instruments that would facilitate the flow of
funds to the real economic sector," he said.

Among the instruments Premier Sargsyan included government guaranteed
loans to the real sector, the Government’s share in enterprises’
capital, promo tion of construction and credit guarantees to the
developers meeting certain standards set by the Government.