Nov 30 2009

Amid the financial and economic crisis in Armenia, the RA Government
has provided budget guarantees to the amount of U.S. $10m to a number
of construction companies this year for completing the construction
of elite housing.

Khachik Avdalyan, Assistant to the RA Prime Minister, told
that U.S. $2.5m budget guarantees were provided to the Elite Group
Company by means of the Ameria Bank. The company is to repay the money
in three years. The Levon Amirkhanyan received U.S. $2.64m guarantees
by means of the Prometey Bank. Also, the MG Housing Ltd received U.S.

$3m by means of Inecobank, the individual businessman Vahe Harutyunyan
U.S. $950,000 by means of Areximbank and the Norashen-2007 Company
U.S. $500,000. Avdalyan said that the Government was to provide
guarantees to two more companies. However, the Hermek Company
encountered problems and did not receive the U.S. $1m intended for
it, and the AVO S.M.G. refused the government guaranteed funds. "It
is not money, but guarantees that the government provides to promote
the completion of housing construction projects. We made this step
to prevent mistrust amid the crisis," Avdalyan said.

As to whether the Government is supervising the companies' activities
to prevent misapplication of funds, Avdalyan said that "the Government
provides guarantees only for the principal sum, without interest rates,
which prompts the banks to conduct monitoring." Whether the Government
made the right decision to provide funds to a sector that actually
caused the crisis, he said that "doing nothing would be easier, but
refusing the funding amid the crisis would create problems. Economic
diversification will reduce the share of this sector, which has
actually causes a grave crisis here."

If case the construction companies fail to repay the funds,
the Government, at taxpayers' expense, will have to sponsor the
construction of elite housing. A correspondent made several
attempts to talks with the construction companies' managers. He failed
to find three of them.

Alik Hovhannisyan, Director of the Levon Amirkhanyan Ltd. said that
the company received U.S. $2.6m for completing the construction of
elite housing in Sayat Nova St. by 2010. As to the price of 1 sq meter,
he said with irritation: "I do not want to say, it is secret."

Armen Mkoyan, Director of the Elite Group Company, said that the
company received a budget guarantee for completing the construction
of a residential building at Dzorapi 40. According to him, the
construction is to be completed in a couple of months, the price of
1 sq meter of housing being 300,000 AMD (about U.S. $800).