Amid the financial and economic crisis in Armenia, the RA Government has provided budget guarantees to the amount of U.S. $10m to a number of construction companies this year for completing the construction of elite housing.
Khachik Avdalyan, Assistant to the RA Prime Minister, told NEWS.am that U.S. $2.5m budget guarantees were provided to the Elite Group Company by means of the Ameria Bank. The company is to repay the money in three years. The Levon Amirkhanyan received U.S. $2.64m guarantees by means of the Prometey Bank. Also, the MG Housing Ltd received U.S. $3m by means of Inecobank, the individual businessman Vahe Harutyunyan U.S. $950,000 by means of Areximbank and the Norashen-2007 Company U.S. $500,000. Avdalyan said that the Government was to provide guarantees to two more companies. However, the Hermek Company encountered problems and did not receive the U.S. $1m intended for it, and the AVO S.M.G. refused the government guaranteed funds. “It is not money, but guarantees that the government provides to promote the completion of housing construction projects. We made this step to prevent mistrust amid the crisis,” Avdalyan said.
As to whether the Government is supervising the companies’ activities to prevent misapplication of funds, Avdalyan said that “the Government provides guarantees only for the principal sum, without interest rates, which prompts the banks to conduct monitoring.” Whether the Government made the right decision to provide funds to a sector that actually caused the crisis, he said that “doing nothing would be easier, but refusing the funding amid the crisis would create problems. Economic diversification will reduce the share of this sector, which has actually causes a grave crisis here.”
If case the construction companies fail to repay the funds, the Government, at taxpayers’ expense, will have to sponsor the construction of elite housing. A NEWS.am correspondent made several attempts to talks with the construction companies’ managers. He failed to find three of them.
Alik Hovhannisyan, Director of the Levon Amirkhanyan Ltd. said that the company received U.S. $2.6m for completing the construction of elite housing in Sayat Nova St. by 2010. As to the price of 1 sq meter, he said with irritation: “I do not want to say, it is secret.” Armen Mkoyan, Director of the Elite Group Company, said that the company received a budget guarantee for completing the construction of a residential building at Dzorapi 40. According to him, the construction is to be completed in a couple of months, the price of 1 sq meter of housing being 300,000 AMD (about U.S. $800).
