Armenian premier presents first package of measures to be taken to curb spread of COVID-19

23.03.2020 13:31
Armenian premier presents first package of measures to be taken to curb spread of COVID-19

YEREVAN, March 23. /ARKA/. Armenian Prime Minister Nikol Pashinyan on his Facebook page presented the draft package of first measures to be taken to neutralize the economic consequences of the coronavirus, and also offered to submit proposals and comments on it before March 18, 18:00, by sending them to public@gov.am.

ARKA News Agency publishes the whole project presented by the head of government.

  1. Purpose of the measures

The purpose of the measures is to help mitigate the risks associated with current liquidity predicted due to coronavirus in economic entities.

  1. Purpose of assistance

The purpose of assistance is to provide economic entities with the opportunity to gain time to respond to changing demand and to make decisions on continuing activities or regrouping and adjusting to the changing economic situation.

  1. The definition of “economic entity”

According to the logic of this measure, any private resident commercial organization or individual entrepreneur operating in the territory of Armenia (with the exception of banks, credit organizations, pawnshops and insurance companies) that carry out commercial activities in Armenia for at least the last year, have good credit and tax history are considered as economic entity.

  1. Types of assistance

4.1 Assistance is provided to economic entities as co-financing, refinancing and subsidizing of interest rates on target loans received from operating in Armenia and licensed banks or credit organizations (financial organizations). The envisaged types of assistance are expected to be addressed

  • in the area of ​​co-financing: problems of insufficient funds at the economic entity for securing a loan, tasks of partial neutralization of currency risk, as well as partial reduction of interest expenses;
  • in the area of ​​refinancing: the tasks of completely neutralizing the currency risk at an economic entity on loans, as well as a partial reduction in interest expenses;
  • subsidizing: the task of significant reduction of interest expenses at a business entity.

4.2 For each economic entity, only one type of assistance is applicable.

  1. The purpose of loans obtained as assistance instruments

Types of assistance are applicable to those loans that are provided to economic entities to cover the following expenses:

  • Payments of salaries to economic entities’ employees or other payments equivalent to them, but in the case of each employee no more than 500,000 drams per month for a maximum period of three months (hereinafter referred to as employee loans);
  • transfers to the state or community budget of taxes, duties or obligatory payments (hereinafter - loans for taxes, duties and obligatory payments);
  • purchase or import of raw materials with the condition that its entire volume should be used in Armenia to obtain finished products, and the economic entity manages the necessary and appropriate production capacities (hereinafter referred to as loans for raw materials)
  • import of equipment on condition that it will be used in Armenia to organize or expand production (hereinafter referred to as equipment loans)
  • payments for public services - the implementation of costs for electricity, water, gas, communications and telecommunications, but in case of each service no more than monthly 5,000,000 drams for a maximum of three months (hereinafter - loans for utility payments)
  • import of foods by companies engaged in trade, with the condition that purchased or imported goods must be sold in Armenia (hereinafter - loans for food products).
  1. The basic requirements for loans provided in terms of assistance instruments

Loans provided as assistance instruments must meet the following requirements:

  • currency - Armenian dram, in the case of a co-financing instrument, the part provided by a financial institution may also be in currency
  • term - up to 24 months
  • the maximum loan amount provided to one economic entity as assistance tool is equivalent to 500 million drams, and the maximum amounts of co-financing or refinancing for one economic entity cannot exceed AMD 250 million
  • the rule of using credit funds - only non-cash or by bank transfer
  • maximum integrated rate - from 0% to 6% per year (no more than 6%) depending on the rules set up for using the assistance tool.
  1. Organizations providing loans as assistance instruments

7.1 Loans will be provided by all commercial banks and credit organizations operating in Armenia.

7.2 The procedure for applying assistance instruments will be established by a joint act of the central bank and the ministry of finance of Armenia.

  1. Description of the content of assistance tools

Any economic entity wishing to obtain a loan within the framework of this event and meeting the stipulated requirements can submit an application to a financial organization. If it is satisfied at the request of the borrower in accordance to the rules established for this measure, it will be implemented

  • loan co-financing: in a certain amount from the maternal sum, for the same loan term, at a zero interest rate for co-financing, and for the return of the maternal sum - with part of the risk covered. Or
  • loan refinancing: in a certain amount from the maternal sum (in full, in certain cases established by this measure), for the same loan term, with a zero interest rate without covering the risk of loan repayment. Or
  • loan subsidization: for a certain percentage of the loan (in full in the separate cases established by this measure), for the entire loan term without covering the risk of loan repayment
  1. The scope of application of assistance tools depending on the purpose of the loan

Amount of co-financing, refinancing, subsidizing:

a) salaries of employees

  • co-financing amount - 50%
  • refinancing amount - 100%
  • interest subsidy - fully

b) taxes, duties, mandatory payments

  • co-financing amount - 50%
  • refinancing amount - 100%
  • interest subsidy - fully

c) equipment

  • co-financing amount –25%
  • refinancing amount - 50%
  • interest subsidies - 5%

d) the purchase of raw materials

  • co-financing amount - 40%
  • refinancing amount - 50%
  • interest subsidies - 6%

e) utility bills

  • co-financing amount - 45%
  • refinancing amount - 90%
  • interest subsidy - 10%

f) food imports

  • co-financing amount - 30%
  • refinancing amount - 50%
  • interest subsidies - 8%

In the case of points a), b), e), provided that the maximum integrated percentage of a financial institution is 12%, and the currency of its part of the loan is Armenian dram.

In the case of points c), d), f), provided that the maximum integrated percentage of a financial institution is 12% in drams and 9% in foreign currencies.

From March 16 to April 14, a state of emergency is in force in Armenia with the goal of curbing the spread of coronavirus.

According to the data for the evening of March 22, 194 cases of coronavirus were recorded in Armenia, of which 70-75% have derived from cases in Etchmiadzin and in the workplace. Eleven patients were diagnosed with pneumonia, of which six require intensive care.

Armenian citizens from Iran and Italy (residents of Yerevan, Echmiadzin, Meghri and Charentsavan), people in contact with them as well as one Italian citizen and a visitor from France are among those infected.

Two patients who recovered from the coronavirus recovered and were let out of hospital. -0-


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