Prime Minister Nikol Pashinyan has published the first draft measure to neutralize the economic impact of the coronavirus.

“Please submit your suggestions and remarks before this year on 24 March at 18:00 pm by sending them to [email protected].

1. Purpose of the event

The purpose of the event is to assist in mitigating the risks associated with the current liquidity projected to certain RA companies (hereinafter referred to as “economists”) due to coronavirus.

2. The Purpose of Assistance

The purpose of Assistance is to provide entrepreneurs with the opportunity to gain time to respond to changing demand conditions and to continue to operate or adapt and to the changing economic situation.

3. Scope of Entrepreneurs

For the purpose of this measure, any resident private commercial organization or sole proprietor (except banks, credit organizations, pawnshops and insurance companies) operating in the territory of the Republic of Armenia, having a good business activity in the territory of the Republic of Armenia for at least the last year, has a good standing of credit and tax history.

4. Types of assistance

4.1. Assistance is provided to entrepreneurs in the form of co-financing, refinancing and interest rate subsidies on targeted loans from banks and credit organizations operating in the Republic of Armenia (hereinafter referred to as financial institutions). The intended forms of assistance are aimed to solve;

– Co-financing ․ Issues of insufficient level of collateral for the loan holder, partial neutralization of currency risk, and partial reduction of interest expenses.

– Refinancing: issues of complete neutralization of currency risk for the loan holder, as well as partial reduction of interest expenses.

– Subsidies: the issue of significantly reducing the interest expense on the loan holder.

4.2. Only one form of assistance is available for each economic operator.

5. Purpose of the loans to be obtained under the auxiliary instruments

The forms of assistance are applicable to loans provided to businessmen for the following expenses:

– Salaries or payments equal to that of the economic operator, but not exceeding 500,000 AMD per month for each employee for a maximum of three months (hereinafter referred to as employee loans);

– State or community budget taxes, duties and mandatory payments (hereinafter referred to as taxes, duties and mandatory payments),

– Purchase or import of raw materials, provided that the whole volume of raw materials is to be used in Armenia to obtain finished products and the economic operator has the necessary and appropriate production capacity (hereinafter referred to as raw material loans);

– Import of equipment and machinery, provided that such equipment and machinery are to be used to organize or expand production in Armenia (hereinafter referred to as equipment loans);

– Public service payments (electricity, water, gas, communication and telecommunication costs, but not more than AMD 5,000,000 per month for a maximum of three months (hereinafter referred to as utility payments);

– Import of food by trading companies, provided that the product purchased or imported is to be sold in Armenia (hereinafter referred to as food loans).

6. Essential requirements for loans under Assistance Instruments

Loans under Assistance Instruments must meet the following requirements:

– Currency in AMD, in case of co-financing instrument the part of the financial institution may also be provided in foreign currency,

– Term – up to 24 months,

– Maximum amount of loans to be provided under an auxiliary instrument – 500 mln. AMD equivalent and the maximum amount of co-financing or refinancing per economic entity may not exceed 250 million AMD.

– The procedure for using credit facilities only with non-cash and bank transfers,

– The maximum integrated interest rate from 0% to 6% per annum (not more than 6%) depending on the rule for the Assistance instrument used herein.

7. Structures that provide loans under Assistance instruments

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

7.2. The procedure for applying the Assistance instruments will be defined by a joint act of the Central Bank of Armenia and the Ministry of Finance.

8. Description of the contents of the Assistance instruments

In order to obtain a loan under this arrangement, any economic operator that meets the conditions set forth in the foregoing may submit an application to a financial institution, if satisfied, in accordance with the rules set forth herein by the borrower’s request:

– 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 partial risk;

– Taking on the loan repayment, or 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 support tools depending on the purpose of the loan.

Loan purpose co-financing

Amounts of co-financing, refinancing, subsidizing.

1. a) Employee salaries

– co-financing – 50%

– refinancing – 100%

– subsidy in full.

1. b) Taxes, duties, mandatory payments

– co-financing 50%

– refinancing 100%

– subsidy in full.

1. c) Equipment

– co-financing rate – 25%

– refinancing rate – 50%

– subsidy rate – 5%

1. d) Purchase of raw materials

– co-financing rate – 40 percent

– refinancing rate – 50 percent

– subsidy rate – 6 percent

1. e) Utilities

– co-financing rate – 45%

– refinancing rate – 90%

– subsidy rate – 10%

1. f) food import

– co-financing rate – 30%

– refinancing rate – 50%

– subsidy rate – 8%

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 shall be AMD.

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