Armenia’s government formally approved on Thursday a multimillion-dollar stimulus package designed to cushion the economic impact of the coronavirus pandemic on businesses and ordinary people.
The plan makes most Armenian firms as well as farmers eligible for financial assistance or credit subsidies.
It also calls for one-off cash handouts to citizens who have lost their jobs this month due to economic disruption caused by coronavirus. They will receive 100,000 drams ($200) each if they have children under the age of 14 and are the sole breadwinners of their families.
The main focus of the wide-ranging aid is on struggling businesses. In particular, creditworthy firms and individual entrepreneurs will receive grants worth $500 million (just over $1 million) if they pledge to use that money to pay their workers’ wages, buy equipment or raw materials or pay taxes. The scheme will not apply to Armenian banks, insurance companies and casinos.
The government promised additional grants to those small businesses that have not laid off any workers in recent weeks. The amount of such funding will depend on the volume of their annual turnover.
The government will also enable small firms to receive low-interest loans with subsidies to be paid to commercial banks.
The banks will also be paid to provide cheap credit to farmers across the country. The latter will be able to borrow up to 1 million drams each and avoid paying any interest for two years.
If farmers set up cooperatives and launch major agricultural projects the government will co-finance between 30 percent and 70 percent of them.
“If a cooperative decides, for example, to take a 200 million-dram loan it will only need 60 million drams worth of collateral,” Economy Minister Tigran Khachatrian said during a cabinet meeting. “The government will cover the rest.”
Prime Minister Nikol Pashinian said, for his part, that the government assistance will also boost Armenia’s banking system. “We want the circulatory system of our economy to start working again,” he told ministers.
Pashinian insisted that the coronavirus relief package will not only help the domestic economy weather the storm but also lay the groundwork for its renewed expansion during “the post-epidemic period.”
The premier did not specify the total amount of the emergency funding. He said last week that the government plans to inject at least 150 billion drams ($300 million) into the economy. Armenia’s overall public spending is projected to total around $4 billion this year.
Opposition leaders dismissed the promised aid as insufficient. During a parliament debate on Wednesday, some of them called on the government to impose a blanket freeze on all loan repayments in the country.
Pashinian rejected those calls. He said the banks should deal with defaulting clients on a case-by-case basis. Some banks have already decided to extend repayment deadlines for consumer and mortgage loans by two months.