Prime Minister represents project to neutralize economic consequences of coronavirus

Prime Minister of Armenia Nikol Pashinyan represents a project to neutralise the economic consequences of Coronavirus on his Facebook page.

“Dear Compatriots, here I present the first project of neutralizing the economic consequences of Coronavirus. Please make suggestions and comments by March 24, 18:00 writing to [email protected].

1. Purpose of Measure The purpose of the measure is to individual Armenian businessmen (hereafter referred to as “businessmen”) who are predicted to have risks associated with the current liquidity due to the situation of coronavirus.

2. Purpose of Assistance The purpose of the assistance is to provide extra time for the businessmen to have opportunity to record the changing demand conditions and therefore to continue or improve their activity and to make decisions associated with the changed economic situation.

3. Scope of businessmen The scope of businessmen includes any resident private commercial organization or sole proprietor in the Republic of Armenia (except for banks, credit organizations, pawnshops and insurance companies), which has conducted commercial activity in RA in the period of at least one year and has good credit and tax history.

4. Types of assistance
     4.1. Assistance is provided to the businessmen from banks or credit organisation operating and licensed in the Republic of Armenia (hereinafter referred to as financial organisations) in the way of formulating co-financing, refinancing and interest rate subsidies.These ways are supposed to solve the following problems
- Co-financing։ the businessmen’s devaluation for the loan , partial neutralisation of the foreign credit risk, and partially reducing interest expense.
- Refinancing : Complete neutralisation of the risk of devaluation for the loan holder, as well as partial reduction of interest expenses.
- Subsidies: Ability to significantly reduce interest expense for the loan holder.
     4.2. Only one modified form of assistance is available for each businessman.

5. Purpose of loans to be created under assistance Assistance forms are applicable to the loan, available for the following expenses:
- salaries or equity payments for employees not more than 500,000 AMD for each per month for a maximum of three months (hereinafter referred to as employee loans);
- State or community taxes, duties and mandatory payments (hereinafter referred to as taxe, duty and mandatory payments),
- the buying or import of raw materials, provided that the entire volume of raw materials is required for use, the finished products can be licensed and economically managed with the necessary and appropriate production capacity (hereinafter referred to as raw material loans);
- import of equipments and devices, provided that these devices and equipment can be used to organize or expand the industry in RA (hereinafter referred to as equipment loans)
- Public service payments (electricity, water, gas, communication and telecommunication costs, not more than 5,000,000 AMD per month not more than for three months (hereafter referred to as utility payments),
- import of food by trading companies, provided that the purchased or imported product must be realised in Armenia (hereinafter referred to as food loans).

6. Principal requirements for loans under the assistance

The requirements for the assistance loans are as follows:
- currency AMD, in case of co-financing the part of the loan provided by the financial organisation can be in foreign currency.
- term up to 24 months,
- the maximum amount of loans to be provided for per businessman 500 million AMD equivalent, and the maximum amount of co-financing or refinancing per businessman not more than 250 million AMD,
- the procedure for using credit facilities only non-cash and bank transfers,
- maximum integrated interest rate 0% -6% annually (not more than 6%) according to this Regulation for Assistance .

7. Organisations providing assistance loans
     7.1. All commercial banks and credit organizations operating in Armenia:
     7.2. The procedure for providing assistance loans will be defined by the Joint Activity of the Central Bank of Armenia and the Ministry of Finance of the Republic of Armenia.

8. Description of the contents of the Assistance In order to obtain a loan under this arrangement, any businessmen that meets the conditions set forth in the foregoing project may submit an application to a financial institution, if satisfied in accordance with the rules set forth herein the following steps will be taken:
- co-financing of the loan with a certain amount of principal, for the same period of the loan, with 0% of the co-financing rate, with regard to the repayment of the loan principal, with partial risk taking, or
- refinancing of the loan with a certain amount of principal (in full, as specified in this event), for the same loan period, at 0% interest rate, with no risk of loan repayment, or
- Subsidy of the loan with a certain amount of interest on the loan (in full, as specified by this measure), for the entire loan term without any risk of loan repayment.

9. Limits on the use of Assistance depending on the purpose of the loan.
Amounts of co-financing, refinancing, subsidizing.
a) salaries of employees - 50% co-financing - 100% refinancing rate - interest subsidy in its entirety.
b) taxes, duties, mandatory payments - 50% co-financing - 100% refinancing rate - interest subsidy in its entirety.
c) equipments - 25% co-financing - 50% refinancing rate - 5% interest subsidy
d) purchase of raw materials - 40% co-financing - 50% refinancing rate - 6% subsidy
e) utility payments - 45% co-financing - 90% refinancing rate - Interest subsidy - 10%
f) import of food - 30% co-financing - 50% refinancing rate - 8% interest subsidy In the case of points

(a), (b), (e), provided that the maximum integral% of a financial institution will be 12%, the currency of its portion of the loan will be AMD.

(c), (d), (f) provided that the maximum integral% of a financial institution will be 12% in AMD and 9% in foreign currency. "