YEREVAN, October 14. /ARKA/.A new report commissioned by IFC, a member of the World Bank Group, has identified steps that the government of Armenia can take to stimulate the leasing industry, which would in turn support the development of small and medium enterprises.
The report, produced by the IFC Armenia Banking Market Development Project upon the request of the Ministry of Economy, found that by discontinuing the use of import VAT on goods for leasing purposes, the government would stimulate the expansion of the leasing industry. Other recommendations concern improvements of the Civil Code and further promotion of leasing with small and medium enterprises.
Currently at a low level of development in Armenia as compared to other countries in the region, leasing would largely help small and medium enterprises, which account for significant output and employment in the Armenian economy.
“Leasing can support the growth of small companies, which do not have property to secure bank loans and therefore find it difficult to access traditional bank finance,“ said Thomas Lubeck, IFC Regional Head, Caucasus. “This report identifies specific steps that the government can take to further stimulate the growth of the leasing industry.”
IFC supports the development of leasing in Armenia through a combination of targeted investments and advice.
IFC was a co-founder of AGBA Leasing, Armenia’s first leasing company, investing equity and providing a long-term senior loan to the company in 2003. Earlier this year, IFC provided an additional $3 million loan to AGBA Leasing to help expand access to finance for local small and medium enterprises.
Since Armenia became a member of IFC in 1995, IFC has invested $87 million in 18 projects across a range of industries, including financial markets, general manufacturing, energy, mining, and chemicals. IFC Advisory Services provides advice through projects focusing on the financial sector, sustainable energy, and regulatory simplification. In fiscal 2010, IFC achieved its highest level of investments in Armenia, with $35 million in total commitments for six projects in the financial, mining, and construction sectors.
IFC, a member of the World Bank Group is the largest development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives—by providing financing to help businesses employ more people and provide essential services, mobilizing capital from others, and delivering advisory and risk-management services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org.
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