ARMENIAN GOVERNMENT REVEALS PLAN FOR RUSSIAN LOAN
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May 21st, 2009
YEREVAN (RFE/RL)-The Armenian authorities shed more light Thursday
on how they plan to spend a $500 million anti-crisis loan that will
be provided to them by the government of Russia.
An agreement on the release of the loan, repayable in 15 years, was
signed by the Armenian and Russian foreign ministers in Moscow on
Wednesday. They confirmed that it is meant to alleviate the growing
impact of the global economic meltdown on Armenia.
Economy Minister Nerses Yeritsian told RFE/RL that the bulk of the
sum will be used to finance "development programs" envisaged by
the Armenian state budget for this year. He gave no details of those
programs.
The Russian loan is equivalent to approximately one fifth of total
expenditures projected by the budget. The Armenian government has been
struggling to meet the spending target because of a major shortfall
in tax revenues resulting from the economic recession.
Addressing a weekly session of his cabinet earlier on Thursday, Prime
Minister Tigran Sarkisian said $30 million of the loan will be re-lent
to Armenian small and medium-sized enterprises (SMEs) through local
commercial banks. The government already obtained a $50 million loan
from the World Bank for that purpose earlier this year.
"Additional funs will be allocated to mortgage lending," said
Sarkisian. He referred to a special fund that was set up by the
Central Bank of Armenia (CBA) to make housing loans more accessible
and cheaper to the population. The CBA contributed 5 billion drams
($13.4 million) to the fund in April and expects its authorized
capital to total 30 billion drams by the end of this year.
The authorities hope that the mortgage scheme will also give a boost
to Armenia’s construction sector. It has been hit particularly hard
by the economic crisis, contracting by 42.4 percent in the first four
months of 2009. The slump was in turn primarily responsible for a
9.7 percent decline in Armenia’s Gross Domestic Product registered
during that period.
"The 42 percent reduction is normal in the sense that the situation
is similar all over the world," said Yeritsian. "Demand and prices
for real estate have gone down everywhere."
The minister added that the government has approved unprecedented tax
rebates for the country’s leading construction firms in addition
to 20 billion drams in credit guarantees that it offered them in
April. "Government efforts to stop [the decline] are evident, and I
want to stress that time is needed for that to affect the economy,"
he said. "I hope that we will see an opposite trend in the second
half of the year."