By Susanna Petrosyan, Yerevan. Exclusively for Vestnik Kavkaza
The population of Armenia is suffering from many socio-economic problems. The banks play a significant role, adding to pressure on people by granting loans for business development, consumer and other loans at extreme interest rates, exceeding 15% annually. Either because of poor knowledge about commercial banks or miscalculations, many people are becoming hostages of the banking system that offers quite harsh conditions. A loan is usually granted at very high annual interest rates that only commercial companies can afford.
Many businessmen willing to open small and medium-sized enterprises have become hostages of bank loans. They were forced to pay the initial sum and huge interest rates. Such a practice is often a barrier to medium and small businessmen, especially when their guarantee is real estate. “It is unclear why commercial banks demand business plans from entrepreneurs to grant loans, if the guarantee is pretty much a reliable insurance for possible risks?” wonders economic observer Albert Khachatryan of News.am.
Small private businessmen, such as taxi drivers or farmers, belong to the second category of debtors. They develop their business (purchase of new car parts, seeds, rent agricultural equipment, build greenhouses) using bank loans. The position of farmers is aggravated by weather that may put them on the brink of collapse, the country has no insurance services for harvests. 40% of the employable population of Armenia makes money from agriculture.
Gagik Tsarukyan, the leader of the prosperous Armenia party, said that 99% of the Armenian population were forced to take high-interest loans in banks and fell into a trap. “The world has no higher interest rates than Armenia, 16-30%. The rates in banks should total 2-6% so that people could pay them. People should feel the results of real reforms in everyday life. It is time to make a step instead of continuing pointless talks. It is impossible to fill the budget in such a way, it breaks people’s spines.” In Tsarukyan’s words, it is important to stimulate the development of small and medium-sized business, that is what fair and competitive conditions are for.
Unfortunately, fear of borrowing has affected family events. It is a mass problem. But the tradition of taking loans for funerals and especially luxurious weddings is becoming a more highlighted tradition. Many banks offer consumer loans for weddings. The maximum sum may reach $4,000-5,000. Unibank, for example, gives 18 months to pay for such a loan at an interest of 22% annually. Real estate and cars are accepted as a guarantee.
The policy of banks fits in with the logic of the anti-public activities of the government that follows a certain scheme: close ties between power and business, protection of interests of monopolies (usually controlled by the authorities or their relatives). Their strengthening causes the liquidation of small and medium-sized businesses, growth of unemployment and rises in the poverty level.
The policy of the banks fits into the logic of anti-public activities of the governmentBy Susanna Petrosyan, Yerevan. Exclusively for Vestnik KavkazaThe population of Armenia is suffering from many socio-economic problems. The banks play a significant role, adding to pressure on people by granting loans for business development, consumer and other loans at extreme interest rates, exceeding 15% annually. Either because of poor knowledge about commercial banks or miscalculations, many people are becoming hostages of the banking system that offers quite harsh conditions. A loan is usually granted at very high annual interest rates that only commercial companies can afford.Many businessmen willing to open small and medium-sized enterprises have become hostages of bank loans. They were forced to pay the initial sum and huge interest rates. Such a practice is often a barrier to medium and small businessmen, especially when their guarantee is real estate. “It is unclear why commercial banks demand business plans from entrepreneurs to grant loans, if the guarantee is pretty much a reliable insurance for possible risks?” wonders economic observer Albert Khachatryan of News.am.Small private businessmen, such as taxi drivers or farmers, belong to the second category of debtors. They develop their business (purchase of new car parts, seeds, rent agricultural equipment, build greenhouses) using bank loans. The position of farmers is aggravated by weather that may put them on the brink of collapse, the country has no insurance services for harvests. 40% of the employable population of Armenia makes money from agriculture.Gagik Tsarukyan, the leader of the prosperous Armenia party, said that 99% of the Armenian population were forced to take high-interest loans in banks and fell into a trap. “The world has no higher interest rates than Armenia, 16-30%. The rates in banks should total 2-6% so that people could pay them. People should feel the results of real reforms in everyday life. It is time to make a step instead of continuing pointless talks. It is impossible to fill the budget in such a way, it breaks people’s spines.” In Tsarukyan’s words, it is important to stimulate the development of small and medium-sized business, that is what fair and competitive conditions are for.Unfortunately, fear of borrowing has affected family events. It is a mass problem. But the tradition of taking loans for funerals and especially luxurious weddings is becoming a more highlighted tradition. Many banks offer consumer loans for weddings. The maximum sum may reach $4,000-5,000. Unibank, for example, gives 18 months to pay for such a loan at an interest of 22% annually. Real estate and cars are accepted as a guarantee.The policy of banks fits in with the logic of the anti-public activities of the government that follows a certain scheme: close ties between power and business, protection of interests of monopolies (usually controlled by the authorities or their relatives). Their strengthening causes the liquidation of small and medium-sized businesses, growth of unemployment and rises in the poverty leve
