ArmInfo. Armenia is discussing the possibility of launching a mechanism to provide partial guarantees for SMEs (small and medium-sized businesses). This was stated by RA Central Bank Governor Martin Galstyan during a conversation with journalists on the sidelines of the "SME Sector: Impact and Development Challenges" forum.
Specifically, he noted that discussions are underway between the Central Bank, the Ministry of Economy, and the World Bank.
"The biggest problem for micro, small, and medium-sized businesses is the lack of authorized capital. This means that people start a business without having accumulated their own capital. This is why banks, given the risks, require collateral. For many businesses, this becomes an insurmountable obstacle," Galstyan explained, noting that the launch of such a mechanism would allow businesses to overcome existing limitations.
However, the issue is still under discussion; implementation is not yet on the table. "There are numerous nuances that need to be considered to ensure the program's effectiveness," he noted.
It's worth noting that of the approximately 115,000 micro, small, and medium-sized enterprises (MSMEs) operating in Armenia, only 16,000 have loans, while tax revenues account for just over a third. Moreover, the SME sector accounts for approximately 35% of Armenia's GDP, compared to 50-60% in EU countries and 45-50% in neighboring Georgia.
It's worth noting that just recently, the European Investment Bank Group (EIB and the European Investment Fund - EIF) announced the provision of a partial portfolio guarantee to Ameriabank, which will unlock up to ?106.25 million in new financing for MSMEs in Armenia. Thus, the EIB and EIF are joining forces with the Armenian bank to expand access to finance for micro, small, and medium-sized enterprises (MSMEs) in Armenia. The project aims to improve access to finance for Armenian MSMEs, particularly those facing difficulties in accessing affordable financing.
Prior to this, in December 2023, the EIB Group launched an expanded private sector support scheme for Eastern Partnership countries, introducing its new EU4Business guarantee instrument. The EIB's initiative to launch the EU4Business guarantee instrument for the first time in Armenia is a call to action for financial institutions to take advantage of the opportunity to share credit risks and build a new lending portfolio for small and medium-sized businesses.
