The Armenian government has offered loan portfolios for local businesses that are likely to be affected by the economic consequences of the ongoing coronavirus pandemic.
Prime Minister Nikol Pashinian told his cabinet on Thursday that companies will be able to borrow money from banks at subsidized interest rates to meet their current financial obligations. Other designated funding, he said, will be spent on social assistance.
“We will launch a package of approximately 25 billion drams (over $50 million) for urgent business support. We will have another package of 25 billion drams made ready for social assistance, which will be used as needed. Also, we will set up a fund of about 80 billion drams (over $160 million) aimed at financing reorganizations and readjustments of the economy,” the prime minister said.
Pashinian explained that funds will be made available for businesses that need to keep paying salaries to their employees and fulfill their tax obligations to the state during the crisis.
“Commercial banks and loan organizations will cover 50 percent of the funding, and the rest 50 percent will be funded by the government. The government financing will be interest-free, and the interest rates of commercial banks and lending organizations will also be subsidized by the government. In other words, entrepreneurs will get loans at a zero percent interest rate,” he said.
According to Pashinian, financing will also be provided for the purchase and import of raw materials, as well as equipment and instruments. The government will require, however, that products made from these raw materials be marketed locally and the equipment be used for expanding local production, he added.
“[It will be for] incurred costs for the use of electricity, water and gas, but for each service it will not exceed 5 million drams ($10,000) per month and will not be provided for longer than three months. It will also apply to the import of foodstuffs by trading companies when the purchased or processed products are to be sold in the Republic of Armenia, the purchase or import of fertilizers, seeds, saplings and other agricultural raw materials if the whole volume of imports is to be used in Armenia.”
The Armenian government expects that the total aid package conditioned by the coronavirus crisis will amount to 150 billion drams (over $300 million). At the government meeting Prime Minister Pashinian said that the proposed package will be put to public discussion for further improvements, after which it will be finally endorsed.
Armenia posted a 7.6-percent GDP growth for 2019 and expected its economy to expand by 4.9 percent this year. At the beginning of the year, before the onset of the coronavirus pandemic, the World Bank forecast an even faster annual growth of 5.1 percent for Armenia in 2020.