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CREDITS ALLOCATED BY USDA TOTAL $31.5MLN.

MARCH 7. During its nine-year activities in Armenia, the US Department of Agriculture has allocated credits totaling 31.5mln. USD under the Marketing Assistance Program. In his exclusive interview to ARMINFO, Program Director Craig Infanger said that financing is carried out in six components on soft terms. This is strategic crediting of agrobusiness, agroleasing, financing of production credit-clubs, allocation of tied credits, assistance to small enterprises and allocation of target-oriented grants in co-financing. Under the first and chief component of the Program, the strategic crediting of agrobusiness, the maximum sum per one borrower is 50,000 USD. The credit is allocated at the annual interest rate of 15%, with the term of credit not exceeding three years. Financing is carried out through partner-banks. The second component is the crediting of leasing business. The main peculiarity is leasing on condition of purchasing necessary equipment and transport vehicles. Financing under this component was launched in 2000. Deals are effected through the "Argroleasing" private company. During the last two years, 800,000 USD has been allocated for the purchase of equipment. Three clients fully returned the sums. The third large component is the financing of production clubs, which are established for the enterprises sponsored by the USDA under the Program. These enterprises are specializing in fruit and vegetable processing and dairy production. The credits are noninterest bearing, but are allocated within the collective responsibility of the borrowers. Credits totaling 550,000 USD have been placed through 32 production clubs which comprise 600 members. The accounts under this component are served through partner-banks. The fourth component, which is as large as the others, are tied credits aimed at the import of products not made in Armenia. The funds are spent on the import of high-quality glass and plastic containers, paper-bags and sacks, corks, capsules, which, in turn, facilitates the sale of the home-made products. The credits are allocated for a year at the annual interest rate of 12%. The fifth component is the crediting of small enterprises. The credit per one borrower does not exceed 10,000 USD, the annual interest being 15%. Forty five credits have been allocated, and financing is carried out through partner-banks. The sixth component is the allocation of target-oriented grants in co-financing. These funds are allocated for such purposes as establishment of necessary laboratories, initial export of products, etc.. The USDA's partners under the Marketing Assistance Program are Armagrobank, "Converse Bank", "Anelik Bank", Armsavingsbank, and the "HSBS Bank of Armenia". "Anelik Bank" and Armsavingsbank were only recently - last December - involved in the Program. The USDA-MAP assumes the credit default risk, except in the case of "Anelik Bank", where it is shared by the partners. The lion's share of the interest payments belongs to banks. The USDA-MAP took this course to assist the development of Armenia's banking system. As regards problematic partner-banks, Infanger singled out "Shirakinvest", "Lend" and "Credit Yerevan". They were once actively financed under the Program, but after the trusteeship process got under way, some of the allocated credits were frozen. Despite such cost of the Program, the USDA-MAP representation in Armenia is not going to slow down the rates of financial assistance to the agricultural sector, which, in turn, is a risky zone. There are specific examples - enterprises which, after receiving the credits, expanded the assortment of their products, improved its quality and design of packages, facilitated their sale abroad. Moreover, they received the highest estimations at international competitions. In particular, some Armenian wines won silver and gold medals several times. This, in turn, testifies that target-oriented financing ensures the effectiveness of investments, whose regular monitoring reduces possible risks, which produces good results and makes the sphere's crediting promising. REFERENCE: The USDA launched its programs in Armenia in 1992. During the first years it was aimed at facilitating consultations on agricultural service. The USDA allocated necessary funds. In 1996, the Marketing Assistance Program was launched by a new method of financing, which was carried out from the funds allocated by the US government under the program of assistance to Armenia. The main direction was assisting agriculture and business. According to the latest data, financial and technical assistance has been rendered to 50 or even more clients, which allowed over 17,500 farmers to sold their products to the clients of USDA-MAP.