Citing the need to support domestic agriculture, the Armenian government decided on Thursday to continue subsidizing interest rates on loans provided by commercial banks to tens of thousands of farmers.
The government extended until the end of this year a lending program that was launched by it two years ago. Under that scheme, three Armenian banks specializing in agricultural credit agreed to slash their interest rates from over 20 percent to 14 percent. The government subsidies cut those rates further to 8-10 percent.
“Four percentage points of that were subsidized,” Agriculture Minister Sergo Karapetian told fellow cabinet members. “In the 225 most underdeveloped communities the subsidies amounted to 6 percent.”
According to Karapetian, some 42,300 farmers received subsidized loans worth a total of 32.2 billion drams ($80 million) in 2011 and 2012. The minister did not specify the total amount of government money that will be spent on such subsidies this year.
Scores of farmers across Armenia have been struggling to repay loans borrowed from banks. Many of them risk losing their land and even houses used as collateral.
Agriculture has been a major focus of the government’s economic policy in the last few years. The government has also sought to boost the sector with subsidized diesel fuel and fertilizers. Many farmers continue to complain, however, about what they say is a lack of state assistance.
Prime Minister Tigran Sarkisian on Thursday ordered the Agriculture Ministry and other government agencies to do more to help the mostly low-income farmers sell their produce this summer and fall.
According to the National Statistical Service, Armenia’s agricultural output rose by 9.5 percent to 840.4 billion drams in 2012. The strong growth was made possible by favorable weather conditions.