Banks May Gradually Slow Down Lending Rates: Central Bank

The Central Bank of Armenia has received signals from its banking system partners indicating that banks may gradually slow down their lending rates. Central Bank President Martin Galstyan made this statement during a press conference.

“We are also receiving signals from our banking system partners that a significant number of banks may try to reduce their balances this year, which is expected to result in a possible gradual slowdown in lending rates,” said Galstyan.

He reminded that in 2020, Armenia went through the coronavirus pandemic and war, which have severely impacted certain sectors of the economy more than others. “Therefore, expecting that lending in these sectors will occur at the same volume and in the same magnitude as in previous years is quite optimistic. Thus, banks, being pragmatic, believe that there will be a certain review of balances during this year,” said the Central Bank President, adding that efforts should be made to keep this figure as small as possible.

According to the Central Bank President, the most crucial action the government should take this year is to implement structural reforms that contribute to the potential level and growth of the economy. This means that the state must be capable of conducting public expenditures, mainly public capital expenditures. Moreover, the Central Bank is extremely concerned about the underperformance in capital expenditures in recent years.