A 10% decline is expected in the Armenian banking system this year, Chairman of the Union of Banks of Armenia (UBA) Emil Soghomonyan told reporters. He assured the journalists that the country’s banking system will register no decline next year. According to Soghomonyan, 16 of the 22 Armenian banks will close this year with profit, with only six to sustain losses.

As regards the Russian stabilization loan, Soghomonyan refuted the rumors that the Armenian Government is trying to save banks from bankruptcy by distributing funds among them. According to him, this is the most effective way of distributing funds, as they thus become easier available to small and medium-sized enterprises (SME). Banks issue credits to SME, as well as mortgage and car loans at annual interest rates of 16 and up.

Soghomonyan also told reporters about reforms in the Armenian banking system. He pointed out that much attention is being paid to the value-added tax. The Government has submitted a package of reforms to Parliament. In its turn, the Union of Bank of Armenia submitted a 17-point proposal. Reforms are expected in the real estate sector as well — a single real estate registry is to be established. Soghomonyan pointed out that outstanding loans have constituted 5-6 per cent this year against 1% at the end of last year.