Agricultural Loans: the Policy of the Government and Banks and Its Consequences
20.12.2014
13:00
People in Armavir villages are foremost concerned over the repayment of agricultural loans. Over 90 percent of locals have agricultural or consumer loans, moreover they have taken out loans from different banks.

It is widely known that a lot of rural people put their property in pledge to pay the interests and principal of the loans. Having a bad credit report has become an integral part of their life.

“We think it essential to have a well-worked out credit policy in agriculture. Though the need for loans is increasing, we face rather serious problems now. People are rightfully complaining that the interest rates for agriculture loans are fairly high. Moreover, rural households suffer from climate changes,” said Garnik Petrosyan, Deputy Minister of Agriculture.

The Media Center, in cooperation with the Armavir Development Center, held a panel discussion, entitled “Agricultural Loans: the Policy of the Government and Banks and Its Consequences” in Armavir. The panelists included: Garnik Petrosyan, Deputy Minister of Agriculture; Armen Arabachyan, Head of the Armavir Branch at Aregak Universal Credit Organization; Grisha Balasanyan, Journalist at Hetq.am; and Artur Ayvazyan, Head of the Agriculture and Nature Protection Department at Armavir Regional Council.

Artur Ayvazyan noted that numerous banks work in the region but the lion part of agricultural loans is provided by ACBA Credit Agricole Bank which works locals in 93 communities.

“In 2014 6312 borrowers applied to banks and credit organizations and obtained 8.12 billion drams 2.59 billion out of which is with the state subsidies. Banks should have lower interest rates and provide long-term loans,” said Ayvazyan.

Nowadays a lot of people, Armen Arabachyan believes, obtain loans and do not use them to develop their agricultural activities and, as a result, agriculture and economy as such do not get developed in Armenia.

Grisha Balasanyan, who has been investigating the sector of agricultural loans, said, “Banks and credit organizations are also to blame for this situation when agricultural loans are not used to develop agriculture because they are to conduct monitoring and be consistent.”

The journalist added that the Government must provide agricultural insurance instead of subsidies of 5000 drams.

“It is really important to have agricultural insurance. We have been discussing it for many years but still there is no established system. Thus, this sphere is not attractive. The sources of risk in agriculture are numerous. Anyway, it high time we acted,” said the Deputy Minister.

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