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Credit as a curse for villagers in Armenia2012-08-15 15:20
Despite the positive forecasts of agricultural specialists of Armenia, especially from the Ministry of Agriculture, many villagers appeared unable pay off the loans, thus becoming the hostages of the banking system. Credit knot is increasingly squeezing "throat" of agriculture. Credits have turned into a curse for many villagers. "The time has come, the bank is demanding money with the percent, the harvest is small, and the prices have fallen short of expectations", you can hear this sentence from the lips of the inhabitants of even the most fertile land in the Ararat valley.
Each year, agriculture in Armenia is facing new challenges. This is the weather, credits, lack of subsidies. This time, a sharp appreciation of the dollar against the domestic currency, which occurred over the past few months, has really hit the pockets of the villagers. Since last year, the dollar rose in Armenia for more than 20%. "Last year we took a loan in dollars when the dollar exchange rate was approximately 360 drams per $ 1. Now the dollar is worth more than 410 drams. This is a serious hit to the budget of the villagers. He works a year to gather the crop to feed his family and pay the loan. As you know, agricultural income is not high, and the risks are very high", Aramais, a resident of the village Aygeshat, Oktembeyransky area, told GTimes.
Villagers often take the loans in dollars, because, as they say, banks offer dollar loans with lower interest rates. "It was our common mistake; we took loans in the U.S. currency. The bank several times sent me a notice for payment of the loan, but I have no money. All my property is in the hands of the bank. All given bail", Aramais says, claiming that many residents of both the very Aygeshat and neighboring villages were in a similar situation. "Last year, my neighbor's house was put up for auction. Unless a miracle happens, my family suffers same fate. My neighbor after that gave up and went abroad. Now I also think about this", he added.
According to statistics, the share of dollar lending in agriculture in Armenia is about 70%. The reason is the lowest interest compared to loans in Armenian dram. "In Armenia, the loans are issued at fairly high interest rates - over 20%. We are forced to take a loan, since state subsidies are low. This year they allegedly gave loans at low interest rates (12-14%), but had not enough money, and many have not managed to get it", the villagers, gathered at the House of Culture, told us. "We barely make ends meet. We were forced to take loans and then faced great difficulties in the matter of maturity. The state is not taking anything against the dollar price increase, they have almost ruined many of us", one of the crowd summed up.
As a way out the experts suggest the following - a targeted concessional lending to agriculture areas of strategic importance to the state, as well as the allocation of special funds from the budget for lending at very low interest rates. "Agriculture is rather risky sector; government support must be effective here", an economist, Doctor of Economics Tatul Manaseryan said on this occasion. "We need to create a special government budget for crediting strategic agricultural areas", experts stress, adding that agriculture has long been in a pretty big hole, and the "light at the end of the tunnel is not seen yet".
Armenian economists believe in the country there are much more "problem" loans, especially in agriculture, than indicated in the reports on this matter. "The volume of problem loans in the country is increasing, however so far the "split" has been covered at expense of refinancing, but it is impossible to blow this bubble forever", the experts believe.