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New appointments at VTB Bank (Armenia)

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Head of Agrarian-Peasant Union of Armenia blames banking system for ruining villagers

  • by Gayane Isahakyan

  • Friday, May 30, 17:30

 The banking system of Armenia has led the Armenian villagers to ruin, Head of the Agrarian-Peasant Union of Armenia Hrachya Berberyan said at a press conference in Yerevan. 

"By my calculations, over the period of independence, Armenia has received from international structures almost 50 mln USD loans for various agrarian purposes", said Berberyan. He has no idea of how and how effectively those funds have been used. "The loans were provided to the banks at a low interest rate. For instance, the World Bank provided the Government of Armenia with loans at LIBOR 0.5-0.75%, and the latter provided the loans to the banks at 7% p.a. The banks, in turn, lent the money to the villagers at 24%- 30% p.a.", he said. 

"As a result, the villagers owe big funds to the banks now. I think a special commission must immediately be set up to find out whether the banks properly used the credit facilities meant for agriculture or not", said Berberyan. He recalled that the Credit Yerevan Bank, for instance, borrowed money from the World Bank for development of the agrarian sector and God knows how it spent the money. Another example of Berberyan concerned the state program subsidizing the agriculture loan rates. "The Government provides preferential loans to the farm entities, but in Shirak region only 40 farmers have received loans. Today farmers badly need loans, but the banks fail to satisfy the villagers' needs and agree to lend them at high rates - no lower than 18-20%. Cheap loans are extremely limited today", he said. 

He also added that besides suffering of the credits, rural people have also suffered of frost and hail. "Incidentally, the losses of the agriculture facilities because of hail grow parallel to the growth of the anti-hail stations at the territory of the country. The agriculture sector needs immediate radical reforms.  First, not functionaries should create agriculture cooperatives but the farmers themselves. Secondly, state functionaries have to draw out the law "On producers of agriculture production". The next, it is necessary to fully upgrade the irrigation system. Moreover, the anti-hail services should become more responsible for the losses of the agriculture facilities because of hail.  We also need the net anti-hail system similar to the one functioning in the European countries. And finally, the rates of the banking agro credits should be decreased and the terms of their repayment increased up to  15 years", - Berberyan said.

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