ARMENIA SHOULD FIX INTEREST RATE IN CREDIT AGREEMENT WITH RUSSIA TO SAVE ITSELF OF LIBOR FLUCTUATIONS

ArmInfo
2009-06-16 14:57:00

ArmInfo. Armenia should fix an interest rate in the credit agreement
with Russia to save itself of Libor fluctuations, adviser to the
Armenian National Assembly speaker on economic issue Tatul Manaseryan
told journalists.

To recall, the credit agreement between Armenia and Russia to the sum
of $500 mln was signed on May 20, 2009 for 15 years, under Libor +
3 per annum.

As T. Manaseryan said, upon completion of the crisis the Libor may
raise to the previous level of 6 – 7%, and the Russian credit rate –
to 9 – 10%, respectively. According to T. Manaseryan, such credit
cannot be considered preferential any more. ‘There are no grounds
to think that the global crisis will last for 15 years, and that
Libor will fluctuate during these years within the ‘critically’ low
values of 1 – 2%. Moreover, taking into account the margin of the
commercial banks inside Armenia, the credit funds in this case will
hardly have the expected result for the national economy. The Libor
for the interest rate could be fixed on the agreement signing day,
that is commonly used’, T. Manaseryan said.

To note, the amounts received will be used for mitigation of the
consequences of the global economic crisis on Armenia. The funds will
be directed to construction in the disaster area, crediting of small
and medium entrepreneurship, including through the Small and Medium
Entrepreneurship Development National Center (SME DNC). Part of the
funds will be provided to the big backbone enterprises. The remaining
part will be transferred to a special governmental account in the
Central Bank which will serve a basis for creation of an anti-crisis
stabilization fund. Some part of the funds will be directed to
financing of the budget expenditures in 2010.