As a result of the advertised credits for famers a lot of villagers are now in courts. Many of them have already lost their properties in order to cover the debt of this load. In the conditions of the economic crisis many villagers had to take credits from banks or credit organizations against pledging their properties such as houses, agricultural technical facilities, lands, etc. Even though they understood that the annual interest rate of 28% would be very difficult for them to cover, they had no other option but to take a chance. Even stabile businesses with good income don’t dare to take such borrowings with high interest rates because it is very difficult to cover. Trade banks are borrowing money from international organizations with the 4-5 or maximum 8-10% interest rate, but they give borrowings to farmers with 28% interest rate. These borrowings given to farms and farmers are long-term with a coverage period of five years. Such borrowings with such high interest rates are not supporting the villagers and farmers but embezzling them. Recently this issue was raised in the parliament but there was not result. We talked to several MPs and some of them said that they see a tendency of embezzling villagers. Lyova Khachatryan, who is a non-partisan MP told us the following: ”It is not borrowing, it is embezzling planned in advance. Banks know that villagers don’t have jobs and sources of incomes and they cannot return the money. However they are giving borrowings without estimating the risks. Villagers don’t have anything; they don’t have jobs, their properties are not profitable, and the only thing they have is their houses, which are taken by banks in case of failure to cover their debts. In this case they take what people have through court proceedings. And their associates or partners are waiting for this moment to buy property for such low prices. Thus villagers are losing their homes and becoming homeless. This is not a project to support but to embezzle villagers by banks. They offer 24% interest rate, 1% for forming the documentation, and 3% for providing a bank account, and eventually it turns out that the interest rate is 28%. What can a villager do to make so much money to cover this debt? It means they are doing it on purpose. Such borrowings with such conditions should not be returned. But we do not have laws for this purpose. I have asked some lawyers to help us to make a law concept to try to help these people. If we prove that these borrowings were given on purpose meaning to embezzle them, these borrowings should not be returned.” The MP says villagers should not be blamed of taking borrowings. “Their children or relatives get sick, they borrow 50 thousand from a neighbor, then he takes 100 thousand with interest rate from another person to pay to this one, and eventually he appears in a very bad situation. As a result they go and take money from banks, and banks are using this opportunity to grab what they have by providing borrowings with such high interest rates.” The MP also says that as a result of such situations they also have to sell their products for very low prices. Lilit Galstyan, member of ARF faction, says that neither the government nor the parliament can be indifferent to this issue. “About 70% of our population are villagers, and we must care about their problems. On the one hand, their rights should be protected and it is an issue of national security too, but on the other hand the borrowings were provided by banks, which are independent financial institutions. This problem cannot be solved through harsh methods. However the state should take the role to regulate these relations. They are bringing capital with 5-6% interest rate from abroad and giving to people for very high interest rates. The government and especially the Central bank must interfere. When the CB sees that banks are giving short-term agricultural borrowings with 24% interest rate, it should interfere by all means. It concerns the mortgage credits provided to young families as well. Is there any young family in Armenia which has 350 thousand dram monthly income so that they can take these mortgage credits? It is like they are making jokes on people and it is not logical, it is a very bad trick.”
“On the one hand, we should not press down the banks, and on the other hand we should figure out whether they are using their monopolistic positions for that purpose. Is it reasonable to bring capital with low interest rates and offer short term borrowings to villagers for five times more interest rates?” he said.
Lyova Galstyan says there are no such high interest rates anywhere in the world.
“For example in European countries such as Iceland and Holland they are even using the co-financing tool to support producers. Even if they know that they will not need so many grains or other products during that year, they still buy their products to support producers and farmers, as well as keep stability and solidarity in the country. Do we have economic patriotism? We should not make villagers leave their lands and leave from this country. On the one hand weather conditions are not good, on the other hand the chemical supplies are almost twice expensive now. These villagers will leave everything, will go to Russia to work for them and will get paid five times more. We are doing everything to make these people leave their homes and meanwhile we say that we are protecting our fatherland,” he said. The MP says that in this situation, when many people are not able to return the borrowings and have appeared in the court, the role of the state is very important. “Are we living in a bankrupt country or a land of Zimzimovs who are grabbing people? The government should control the banks. The poor villagers had nothing to do but be optimistic and take borrowings. ” The government should at least explain to people that this 24% interest rate is very dangerous and eventually they will lose their homes. I think the problem should be discussed at different levels with participation of the interested parties to find solutions for the problem,” said the MP.