MP Artzvik Minasyan advises the government and the RoA Central Bank not to conceal the reality of the situation. Hetq has frequently covered the issue of agricultural loans. Many villagers have now found themselves in dire circumstances due to the fact that commercial banks only provide loans in dollars. Many rural residents have been forced to sell off their property to make the interest payments on loans that have increased due to the high dollar exchange rate. To get a clearer picture of the issue, we sought the insights of RoA Deputy Finance Minister Vardan Aramyan and ARF MP Artzvik Minasyan. Mr. Aramyan noted that the matter was serious and that the shortcoming in our society was in the fact that “we are always dependent on the dollar and subject ourselves to exchange risk.” Who is ultimately responsible; borrower or lender? “After 2006, a law regarding foreign currency was adopted that essentially safeguarded the taking consumer loans in AMD. At the time, discussions took place regarding other loans in AMD as well. But loans are products offered by banks. Individuals must assume those risks. To tell the banks that they must completely assume the risk themselves would mean that interest rates would definitely rise sharply,” said Vardan Aramyan. According to the Deputy Minister, crude restrictions could lead the financial system into a crisis given that the system, in essence, experiences currency disconnects. In such a case, it can totally be subject to financial risk. MP Minasyan countered the Deputy Minister by stating that this was the result of the flawed policies pursued by the government and Central Bank. Minasyan argued that if we are talking about the insurance system for risks in the foreign currency market, then one of the important points is this as well, which, in his opinion, is missing in Armenia. In the opinion of MP Minasyan, however much the government declares that Armenia is turning into a financial center, it is impossible to become such a center when the basic rules and methodologies aren’t preserved. “Furthermore, it is vital to ensure such an amount of foreign currency circulation in Armenia’s economy so that people aren’t subject to such crude risks,” he said. “I have one piece of advice for the government and Central Bank. It’s high time we stopped concealing the reality of our situation. Otherwise, you should tell rural enterprises, ‘Dear friends, whatever your income, you need to supplement it with more loans and hand it over to the government and Central Bank. I am fully cognizant of the fact that the commercial banks are the prime consumers but they accomplish this with the assistance of the two large institutions,” he said. Government cannot totally regulate risk factors In response to MP Minasyan, Mr. Aramyan noted his serious opposition to the fact that everything, especially exchange fluctuations, was attributed to the government or Central Bank. “There is no such thing to be found in either economic treatises or international practice,” he said. MP Minasyan suggested that the Deputy Minister read the U.S. Constitution and laws in order to see what responsibilities exist in the American case. “There are several international cases and it’s even a constitutional norm, that when annual currency or inflation indices are breached, it leads to the resignation of the government and Central Bank. We must resolve this issue via legislative amendments,” he said. Mr. Aramyan pointed out that when villagers were taking out loans in dollars, the exchange rates were to their advantage. “But there are always constant risks involved. In the final analysis, if I take out a loan, I am ultimately responsible for it,” he said. MP Minasyan said that everything must be clear and foreseeable for individuals. Hetq also went to the Central Bank for further insight on the issue. There, we were told that, according to Article 7, Part 8.1 of the “RoA Law Regarding Currency Regulation and Monitoring”, the banks and credit organizations provide consumer loans and credits only in RoA AMD and that they can provide business loans and credits in foreign currency as well Definitions of the two types of loans/credits, consumer and business, are supplied by the “RoA Law Regarding Credit Organizations.” Monitoring to see that these laws are followed by the banks is carried out by the RoA Central Bank. Also pertaining to the issues discussed above is the clarification given by the RoA Central Bank’s Advisory Board on February 7, 2007, in regards to Article 7, Parts 5.1 and 8.1, of the “RoA Law Regarding Currency Regulation and Monitoring”.