YEREVAN (Arka)—A total of 60 billion drams (approx. $146.7 mil.) was provided to about 63,000 small farms in Armenia as preferential agricultural loans over the last three years, Central Bank of Armenia Chairman Arthur Javadyan told a parliamentary hearing Tuesday on next year’s budget.
Under a 2011 government decision, Armenian farmers are eligible to preferential agricultural loans at 14% interest rate, of which 4% (6% in border villages) are subsidized by the state. The loans are provided in the national currency, the dram. The average loan size is 625,000 drams (approx.. $1,500), and the grace period is 6 months, after which only interest is required to be repaid, and the principal sum is to be repaid in the following 6 months.
Javadyan said about 10,000 preferential loans had been provided from April to July and as many in August alone this year. He said the program is quite successful adding also that the interest rate on agricultural loans will be lowered.
Javadyan said there is another agricultural lending program implemented in cooperation with the German bank KfW in the amount of 15 million euros and $5.5 million. According to him, before the end of the month another joint program with KfW is to be signed.
The Armenian government’s draft budget for 2015 earmarks 1.2 billion drams for subsidizing agricultural loans. The government has revised the subsidy rate making it 6 percent for all rural communities irrespective of their location beginning from 2015.
According to official data, in 2013 the government spent 634.5 million drams on subsidizing the interests of agricultural loans, up 9.8% from the previous year.
In late August the total agricultural lending stood at 115.3 billion drams, having surged by 54 percent from the beginning of the year. The national agricultural GDP in the first eight months of this year totaled 482.9 billion drams, a 4.9% rise when compared to the same period last year.