Armenia to receive 15 mln-euro loan from KFW for financing small and medium-sized agricultural enterprises

An exclusive interview of Director of German-Armenian Fund Gevorg Tumanyan with ARKA News Agency 

G. Tumanyan- German-Armenian Fund is implementing six credit programs in Armenia’s financial sector; three of them are financed by KfW German bank, one- by World Bank, and two other - by Armenian government.

The program, financed by KfW and budgeted to total 16.8 million euros , has been implemented since 1999 to foster development of small and medium-sized business in Armenia. The last tranche for the program was received in 2004, however, it is still operating due to redemptions made by the partner banks. Besides, in cooperation with KfW we also implement the program on expanding mortgage lending amounted to nearly 32 million euros, and developing renewable energy program with 24-million euro credit portfolio. 

At the same time, Armenia received nearly $50 million by the program financed by the World Bank since 2009. The program embraces a wide range for financing small and medium-sized business. In other words, the funds are allocated almost to all sectors of the republic’s economy, excluding gambling business, securities market, tobacco production, etc. The program is currently being proceeded pretty actively. 

The other two government programs, budgeted to total 15 billion drams and 60 billion drams, were kicked off in 2008 and 2009. The first program aimed for stabilizing economy at crisis period as well as supporting small and medium-sized business. And in the framework of the second program, with 60-billion- dram budget, it was planned to distribute 12 billion drams for mortgage market development whereas 18.5 billion drams- to finance small and medium-sized business. The rest of the funds were anticipated for upholding export-oriented companies operating in airlift, tourism infrastructure development, agricultural purchases and processing, as well as consumer lending. 

G. Tumanyan- Currently we are conducting works on implementing a new program in cooperation with KfW, which is planned to start this year. The program will be directed to financing small and medium-sized agricultural enterprises. The loans will be granted for purchasing agricultural machinery, lands consolidation, building greenhouses, etc. KfW will earmark 15 million euros, another $5 million will be contributed by Armenia’s government as a grant received from the German government. Besides this program, we negotiate with KfW about the possibility to start new phase in the ongoing programs, in particular, related to renewable energy. KfW, encouraged by the successful outcomes of the program in Armenia, looks forward to continuing it , but in a larger format this time. It means, in case the program is approved, the funds will be allocated not only for small hydro power stations but also other projects related to alternative energy sources development. The expected by KfW cost of the program is 40 million euro.

G. Tumanyan- The matter is that the partner banks, conducting the loan allocations afterwards, are chosen in the framework of each program’s tenders. We sel ect banks assessing their specificity and program goals. What refers to the new program on financing agricultural development, the tender is being proceeded now, and we will know which partner banks are chosen pretty soon. I can say that there will be 5 banks. 

G. Tumanyan- Unlike the programs financed by KfW bank, which are aimed at fostering development of Armenia’s finance sector, this program is oriented to assist young Armenian families. The government earmarked nearly 500 million drams with a possible average loan amount of nearly 5 million drams. Thus, in the framework of this program, about 100 young families will be able to receive loans. -0-