YEREVAN, JUNE 5, NOYAN TAPAN. At the June 4 sitting, the Armenian government took a decision to make changes in the government decision of July 12, 2008 on state subsidization of the interest sums of agricultural loans. RA Minister of Finance Tigran Davtian said that the purpose of these changes is to expand the pilot program on subsidization of interest sums of agrucultural loans in 60 communities with scarce resources in Shirak and Gegharkunik marzes. According to him, under the program, up to 10% of interest of loans taken from commercial banks by economic entities engaged in agricultural production of these communities is subsidized from the state budget. The June 4 decision of Armenian government envisages that the loans taken by entities engaged in agrucultural production of the indicated communities will be subsidized under the credit programs of the International Fund for Agricultural Development (IFAD) and the Millennium Challenge Account-Armenia as well. Besides, it is envisaged subsidizing the whole sum of interest on a loan if an economic entity files a bid for loan for the first time. It means receiving an interest-free loan. Another change is related to the end of the program on state subsidization of agricultural loans: it has been extended from July to late 2009. T. Davtian said that the above mentioned steps are part of the anti-crisis measures taken by the Armenian government. In his words, the pilot program attaches importance not to large-scale crediting but to testing the state subsidization mechanisms under conditions of the current market risks. He noted that as a result of the pilot program's implementation, the amount of state budgetary allocations to be provided in 2010 under a non-pilot program will be determined based on the formed demand for state subsidization of agricultural loans. The minister said that according to conditions of the World Trade Organization, state subsidization of agricultural sector must not exceed 5% of the gross agricultural output, whereas in Armenia the sector's subsidization is much less than this index.

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