YEREVAN, June 24. /ARKA/. Interest rates on loans in Armenia may decrease if favorable inflation and geopolitical conditions persist, stated Martin Galstyan, Chairman of the Central Bank of Armenia, on Public Television.
Responding to a question about why borrowing costs remain high despite declining economic risks, the head of the Central Bank noted that such processes are occurring gradually.
According to him, after the signing of regional security documents in the United States on August 8, 2025 (between Armenia and Azerbaijan in the presence of the American president – ed.), Armenia’s country risk premium began to decline, which is already reflected in financial markets.
“Today, the difference between our government bonds and US government bonds is significantly lower than it was a year or two ago.
“That is, the risk factor from the perspective of international investors has significantly decreased, and consequently, the yield on Armenian government bonds has also significantly decreased,” Galstyan said.
He noted that investors are now purchasing not only Armenian Eurobonds but also dram-denominated government bonds.
At the same time, the head of the Central Bank explained that the cost of loans is affected not only by the level of risk but also by the cost of the resources banks attract from depositors.
According to Galstyan, banks currently pay an average of about 10% on dram deposits, while the average rate on consumer loans is around 17%, and on mortgages, around 13%.
“We must look not only at interest rates on loans but also at interest rates on deposits. Banks attract funds at fairly high interest rates, and this is reflected in the cost of loans,” Galstyan noted.
He explained that a reduction in loan rates is possible as deposits become cheaper, but this process cannot happen overnight.
“When banks can reach an agreement with the population and businesses that the banking sector in Armenia has become less risky, deposits will be placed at lower interest rates, and, while maintaining the same profit margins, banks will be able to issue loans at lower rates,” the regulator’s head said.
Speaking about the timing of a possible rate cut, Galstyan noted that such a scenario is likely, but much will depend on external factors.
“There is one major question mark—the development of the global geopolitical situation. If the inflationary background and global economic processes do not require maintaining high interest rates to contain inflation, then it is very possible that this will happen,” he said.
Earlier, in May 2026, Galstyan stated that the risk premium on Armenian Eurobonds had decreased significantly—from 400 to 190 basis points. According to him, the yield on government bonds denominated in drams has also decreased: the yield on ten-year dram-denominated government bonds exceeds 8%.
