Saturday, February 15 2020 03:28

ArmInfo. Agricultural risk insurance will definitely have a positive impact on the development of the agricultural sector of Armenia and on agricultural lending.  This opinion was expressed on February 14 by Chairman of the Union of  Banks of Armenia (UBA), Chairman of the IDBank Board Mher Abrahamyan,  answering a question from ArmInfo.

He said that for 2019 the growth of agricultural loans was in the  range of 10-12%. "I still find it difficult to say how much the  growth of agricultural lending will accelerate after the full use of  agricultural risk insurance, since agricultural insurance is still in  pilot mode. Accelerating lending growth will depend on the speed and  volume of agricultural insurance implementation and the level of mass  use," M. Abrahamyan noted.

In addition to the above, UBA Executive Director Seyran Sargsyan drew  attention to the fact that the full implementation of agricultural  risk insurance will affect not only lending volumes, but interest  rates. "In other words, risk insurance will lead to lower rates. And  in terms of demand, I think that there will be no significant effect.  I note that all banks are engaged in agricultural lending without  exception. And activity in this segment is supported by several state  programs for subsidizing agricultural loans," S. Sargsyan noted .  It  should be noted that, according to the Central Bank of the Republic  of Armenia, growth in the volume of agricultural lending in the  banking system of Armenia accelerated in 2019 to 11.1% from 3.6% in  2018, amounting to 151.3 billion drams or $ 315 million (the Central  Bank publishes data only for residents - Ed.  note). In the total  loan portfolio the share of agricultural loans in the banking system  has decreased over the past 3 years from 6.7% to 4.7%. According to  the data of the Statistical Committee of the Republic of Armenia, in  2019, the agricultural sector lingered in recession, slowing down to  4.2% from 7.6% in 2018, providing a volume of 852.8 billion drams ($  1.8 billion).