By Atom MarkarianThe Armenian government approved on Thursday a new annual plan of action which it said will give a strong boost to small and medium-sized businesses. Ministers said their development will accelerate the overall economic growth.
“I think that this program will have produced desired results a year later,” Industry and Economic Development Minister Karen Chshmaritian told reporters after a weekly cabinet meeting.
A key element of the program is 250 million drams ($430,000) worth of credit guarantees for small and medium-sized businesses that decide to borrow from commercial banks. Government officials hope that Western donors will double the figure.
The money will be provided by a recently created state fund tasked with supporting the sector which now accounts for 35 percent of Armenia’s Gross Domestic Product, twice as more as in 1997.
“Inaccessibility of credit is a major problem facing our small businesses. One of the elements of this program deals with that,” Chshmaritian said.
Analysts caution, however, that disproportionately high interest rates, which average 20 percent at present, are a more serious problem for local entrepreneurs and the government is promising no steps to lower them despite the continuing single-digit inflation.