YEREVAN, April 2. / ARKA /. The Armenian government on Thursday has declined a bill tabled by the Orinats Yerkir party suggesting that individual loans in foreign currency be converted to loans in the national currency, the dram.
The party’s parliamentary faction argued that the conversion will prevent thousands of citizens of Armenia from going bankrupt because of being unable to repay loans in foreign currency due to the weakening dram.
Finance minister Gagik Khachatryan said the conversion is impossible. He explained that the banks must repay loans they attracted from foreign banks and international organizations in hard currency and the proposed conversion would create very serious risks for them.
He said if the loans are converted to drams, the banks will have to spend the equivalent of 2.9 billion USD to buy hard currency which would be a shock to the economy.
He said the conversion would bring about a wide gap between loans and deposits, most of which are in foreign currency and this would cause problems with the solvency of banks.
By this the end of December 2014, the total lending by Armenian banks stood at about 2.095.9 trillion drams, of which loans in US dollar were worth the equivalent of 1.376.5 trillion drams. ($ 1 – 472.37 drams). 0-
