Government’s loan guarantees to private developers reinvigorate sector

YEREVAN, September 7, /ARKA/. David Harutyunian, an aide to prime minister, defended last Friday the government’s plan to provide loan guarantees to private developers to help them complete their unfinished housing projects as part of its anti-crisis measures.

David Harutyunian, who is also the secretary of a special working group established to promote economic recovery programs, said the government guarantees have given a strong push to the sector that had been the locomotive of Armenian economy before the crisis.

Last April, the government approved 20 billion drams ($55 million) in loan guarantees to private developers to help them complete their housing projects. Five construction firms have reportedly received such guarantees since then.

Late in August it approved $2 million in loan guarantees to a private AVO developer to finish construction of a residential building on Abovian street in central Yerevan.

According to official figures, construction sector shrank by 55.5 percent in the seven months of this year, contributing to the total GDP fall. But according to David Harutyunian, the sector began to steadily grow since last May, when volume of construction rose 88 % against April.

In June it rose 130% from May and in July 4.5% from June.

The government said also it will spend part of a $500 million anti-crisis loan provided by Russia, on housing construction in Armenia’s northern regions and another $33 million portion of the loan will be channeled into a recently established state mortgage fund assigned to provide relatively cheap housing loans to the population.  -0-