By Atom Markarian
An Armenian commercial bank received on Friday $500,000 in additional low-interest loans from the European Bank for Reconstruction and Development (EBRD) which are designed to support local small and medium-sized businesses.
Under an agreement signed by the two sides in Yerevan, Armeconombank will lend the money to Armenian companies involved in external trade. The bank’s chief executive, Ashot Osipian, said many of them lack cash to expand their import and export operations.
It is the EBRD’s second lending scheme for Armenian small businesses. In September 2002, the London-based credit institution, which promotes market reforms in former Communist states, allocated $1 million to Armeconombank for that purpose. The latter has already utilized the funds.
The EBRD representative in Georgia and Armenia, Nikolay Hajinsky, said the first program has been a success. “I must stress that this is only the beginning of our cooperation. We have more ambitious plans,” he told reporters.
According to Armenian Central Bank chairman Tigran Sarkisian, direct contacts with Western lending agencies are essential for local banks. “I think that strengthens trust in our banking system,” he said after the signing ceremony.
Armeconombank’s main shareholder, Khachatur Sukiasian, agreed, telling RFE/RL that continued cooperation with the EBRD is strengthening his bank’s credibility and image. He said that is why the bank does not seek substantial profits from the scheme.
Osipian said businesses meeting the program requirements will be able to borrow the fresh EBRD funds at an annual interest rate of 8-12 percent or far below the average market rate.
The EBRD provided a total of $4.5 million in loans to various Armenian companies last year, and, according to Hajinsky, plans to allocate at least as much this year. The bank’s investments in the Armenian economy would have been much higher if it had not abandoned plans to purchase a 20 percent stake in Armenia’s power distribution network. The move followed the Armenian government’s controversial decision to sell the network’s commanding 80 percent share to a little known offshore-registered firm.