YEREVAN, April 16. / ARKA /. Armenia’s Central Bank’s Board has decided today to lower the mandatory reserve norm for liabilities in the national currency, the dram, from 8 percent to 4 percent. The Bank said the new threshold comes into effect from June 12. The mandatory reserve norm for liabilities in foreign currencies is 12 percent
The Central Bank Board said the bulk of loans into the Armenian economy over the past years was channeled into industry, transport, communication and agriculture.
“Loans provided to industrial sector unlike loans stimulating demand, lead to GDP growth and do not form inflationary pressure,’ it said. The Board also said the share of loans provided in the national currency should be increased.
“The lowering of the mandatory reserve norm for liabilities in drams will allow banks to increase their free monetary funds in the national currency, to cut the cost of attracting cash resources in drams and raise their availability,’ the bank said in a press release today.
The Central Bank Board said this downward revision will in turn stimulate banks to increase the amount of loans in drams and boost also demand for government bonds. It will also help bring down market interest rates.
The Bank said also the move is supposed to help implement a string of measures to reduce the dependence of the economy on US Dollars.
According to Central Bank data, as of late December 2012 the banks’ outstanding loans to agricultural sector stood at 32.1 billion drams and an equivalent of 69 billion drams in foreign currency. The amount of outstanding lending to processing sector stood at almost 40 billion drams and the equivalent of 126 billion drams in foreign currency. The amount of lending to communications sector stood at 1.5 billion drams and the equivalent of almost 7 billion drams in foreign currency. Some 9.2 billion drams were lent to transport sector and the equivalent of 30.6 billion drams in foreign currency. -0-
