YEREVAN, October 11. / ARKA /. Vazgen Safaryan, the head of the Union of Domestic Manufacturers, says the funds raised from the sale of the first ever Armenian Eurobonds should be used to boost the industrial sector.

Speaking at a news conference he said the funds should be channeled in the first place into construction of the second unit of the Yerevan Thermal Power Plant that will enable to substantially cut the price of electricity supplied to consumers.

Besides, according to Safarian, part of the funds should be used to expand the Zangezur copper- molybdenum plant. He argued that this will secure additional revenues to the state budget, which will allow the government to increase support to SMEs.

Earlier Armenian finance minister David Sargsyan said that $450 million of the first-ever sale of Armenian Eurobonds that netted the government t $700 million, will be used to repay a $500 million Russian loan that was allocated to Armenia by Russia in June 2009 for alleviating severe consequences of a global economic crisis for the Armenian economy. The loan is repayable in 15 years, but the government said it will repay it ahead of schedule.

David Sargsyan said also about $148 million of the amount will be given to the Central Bank of Armenia to re-lend them to small and medium-sized businesses at a 7% interest rate and repayable in 7 years. With the same purpose about $9.6 million will be provided to SME Investments credit organization at 11-12% interest rate.

In addition, about $7 million will be provided to the Agency for Export Insurance as an investment in the share capital. The minister said the remaining $61.7 million will be used to change the strategy of public debt management.

The Eurobonds were sold on international markets on September 19 at a relatively high yield of at least 6 percent, reflecting Armenia’s “junk” credit ratings assigned by agencies like Moody’s and Fitch. The Armenian finance ministry described the sale as a huge success, saying that investors were ready to buy as much as $3 billion worth of Armenian external bonds. The underwriters are Deutsche Bank AG, HSBC Bank plc and JPMorgan Securities plc. –-0-