The government set aside the assistance in an effort to shore up the construction sector that has born the brunt of the recession after expanding massively in recent years. It was specifically meant for those builders that lack cash to complete housing and other projects.
According to Sarkisian, the government has since guaranteed the repayment of only 3.5 billion drams in loans borrowed by four construction firms from commercial banks. One of his advisers, David Harutiunian, came up with different figures in September.
Harutiunian said only six of out of two dozen companies interested in the scheme have been granted 5 billion drams worth of guarantees. “The criteria used in the selection process are very strict,” he explained.
The Armenian authorities have also sought to boost the construction industry by setting up a special state fund that is supposed to make mortgage loans cheaper and more accessible to Armenians. The government has already channeled 17 billion drams into the fund. Of that 12 billion drams was drawn from a $500 million anti-crisis loan allocated to Armenia by Russia.
The government assistance did not prevent the sector from collapsing by over 50 percent in the first nine months of this year. That was the main factor behind Armenia’s overall 18.3 percent economic contraction registered during that period.
Speaking at a weekly meeting of his cabinet, Sarkisian dismissed opposition criticism of the credit guarantee scheme. “If we foster the development of the mortgage market with 12 billion drams, naturally there must be apartments that our citizens could buy,” he said. “And this allocated sums are negligible and do not correspond to critics’ arguments that we are wasting the credit resources provided by the Russian Federation.”