Armenian gov’t offers stimulus package to help mitigate corona crisis

The Armenian government is offering a series of loans and financial measures to offset the hardships caused by the spread of the coronavirus.

Restaurants, hotels and travel agencies in particular have been particularly hurt in the crisis in Armenia, as elsewhere.

In light of this, the prime minister suggested that the businesses take advantage of “crisis loans.”

The government intends to allocate 25 billion drams ($50 million) for this project.

Another 25 billion drams will be provided as social assistance.

A fund to the amount of 80 billion drams ($160 million) will also be created to restructure the economy as a whole.

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What is a crisis loan?

It is clear some sectors will be unable to avoid serious financial and economic problems.

“This is why we are offering crisis loan portfolios, the essence of which is as follows: 50% of financing is provided by commercial banks and credit organizations, and the other 50% is financed by the cabinet. The government will provide funding with no interest, and will pay interest on loans from banks and credit organizations. That is, the business can take out loans with a zero interest rate,” Prime Minister Pashinyan explained.

Government-provided funds can be used for the following purposes:

–  paying salaries (not more than 500,000 drams, which is about a thousand dollars, per month for each employee and not for more than three months);

– purchasing or importing raw materials, if all of them will be used to produce products that are made entirely in Armenia;

– importing products by companies who have trade agreements in other countries, provided that the entire volume of the purchases will be used or sold in Armenia;

– importing instruments and equipment, including for the production of agricultural products, provided they are used to organize or expand production in Armenia;

– importing fertilizers, seeds, seedlings and other types of agricultural raw materials – again, provided that the entire volume of purchases will be used in Armenia;

– paying electricity, gas and water bills

Details about the loans

The government will provide loans in local currency (drams), and credit organizations or banks can provide funds in foreign currency.

“The loan term is up to 24 months. The maximum loan amount is 500 million drams [approximately one million dollars].

Government co-financing is offered in the following amounts: for salary payments- up to 50%, raw materials – 40%, equipment – 25%, utilities – 45%, food imports – 30%, and agricultural products – 35%,” explained the prime minister.

Prime Minister Nikol Pashinyan completely ruled out the possibility of declaring a “tax holiday.”