Financial Services Monitor Worldwide
October 29, 2014 Wednesday

A total of 60 billion drams were provided to about 63,000 small
farms in Armenia as preferential agricultural loans over the last
three years, Central Bank of Armenia chairman Arthur Javadyan told
a parliamentary hearing today on next year's budget.

Under a 2011 government decision, Armenian farmers are eligible to
preferential agricultural loans at 14% interest rate, of which 4%
(6% in border villages) are subsidized by the state. The loans are
provided in the national currency, the dram. The average loan size
is 625,000 drams, the grace period is 6 months, after which only
interest are repaid, and the principal sum is to be repaid in the
following 6 months.

Mr. Javadyan said about 10,000 preferential loans had been provided
from April to July and as many in August alone this year. He said
the program is quite successful adding also that the interest rate
on agricultural loans will be lowered.

Mr. Javadyan said there is another agricultural lending program
implemented in cooperation with the German bank KfW in the amount of
15 million euros and $5.5 million. According to him, before the end
of the month another joint program with KfW is to be signed.

Armenian government's draft budget for 2015 earmarks 1.2 billion drams
for subsidizing agricultural loans. The government has revised the
subsidy rate making it 6 percent for all rural communities irrespective
of their location beginning from 2015.

According to official data, in 2013 the government spent 634.5 million
drams on subsidizing the interests of agricultural loans, up 9.8%
from the previous year.

In late August the total agricultural lending stood at 115.3 billion
drams, having surged by 54 percent from beginning of the year. The
national agricultural GDP in the first eight months of this year
totaled 482.9 billion drams, a 4.9% rise when compared to the same
period last year. 2014 Global Data Point.