YEREVAN, November 26. /ARKA/. Armenia’s financial sector is quite well capitalized, and one of the potential risks is the high growth of lending, said the IMF Resident Representative in Armenia, Umang Rawat, presenting the report “Caucasus and Central Asia: Economic Outlook and Policy Challenges.”
According to him, the main sectors driving the growth of lending are construction and mortgages.
“We see that mortgage loans have decreased, however, construction loans remain at a high level,” he said.
Rawat also noted that from the perspective of financial stability, real estate prices in Armenia are overvalued, even despite the recent noticeable trend of price decline.
“The prices (for real estate) in Yerevan could be at least 30% lower,” he said.
In this regard, the IMF Resident Representative noted the initiative of the Central Bank in raising the countercyclical capital buffer to protect the financial system from major shocks or potential collapse in the event of unstable market conditions.
Earlier, the Chairman of the Central Bank, Martin Galstyan, stated that the banking sector has significantly improved its resilience in terms of financial stability, adding that, by the regulator’s decision, part of the banks’ profits was directed towards forming an anti-cyclical capital buffer, which was increased to 1.75%.
According to the National Statistical Committee, the volume of loans issued by commercial banks in Armenia at the end of September 2024 exceeded 6 trillion drams compared to 5.9 trillion drams at the end of August.-0-
