WB: SME lending secured by movable property to ensure innovative development to Armenia
03.04.2015,
17:15
Loans for small and mid-scale businesses that are secured by movable property will make it possible to ensure innovative development to Armenia, Angela Prigozhina, the World Bank Private and Financial Sector Coordinator for South Caucasus, said Friday in Yerevan at a conference on introduction of secured deals in Armenia.
YEREVAN, April 3. /ARKA/. Loans for small and mid-scale businesses that are secured by movable property will make it possible to ensure innovative development to Armenia, Angela Prigozhina, the World Bank Private and Financial Sector Coordinator for South Caucasus, said Friday in Yerevan at a conference on introduction of secured deals in Armenia.
In December 2014, Armenian President Serzh Sargsyan signed a bill passed by the National Assembly that implies usage of cars, property, harvest, equipment and other kind of movable property by individual borrowers as pledges.
The package ensures necessary legislative infrastructure to regulation of register of gold and sets a more effective process of application in the event of loan repayment failure.
It also gives additional confidence in purchasing this property in case of failure. The law takes force on October 1, 2015.
Prigozhina said that this reform will also allow stimulation of the private sector's, and availability of financial resources for SMEs will allow innovative development in Armenia.
She said that the country has limited financial resources, and therefore diversification and innovative development will ensure a fast growth and creation of new jobs here.
Stressing the importance of the reform, Prigozhina also said that if lenders will not be sure that the loans they extend are properly secured, they will stop lending money.
«I recommend Armenia to keep working in this direction to create a safe field, where lenders can extend long-term loans, which will be attractive to SMEs and will ensure financial stability.,» she said.
Armenian Deputy Justice Minister Arsen Mkrtchyan, on his side, said the lending secured by movable property will provide SMEs with the resources necessary for development, since they not always can secure loans by immovable property.
«The law is adopted, but it is necessary to work to put it into practice,» he said.
The conference was organized by USAID Program 'Finance for Economic Development', the World Bank and the Armenian justice ministry.
The main aim of the conference is to enhance public awareness of the reforms and to foster a dialogue between concerned organizations.
As the organizers of the event said, unavailability of financial resources in Armenia hobbles development of micro, small and medium businesses, especially in rural areas, and this is caused by unconformity of pledge requirement by financial organizations with MSMEs' property. --0----
