GOVERNMENT OF THE REPUBLIC OF ARMENIA

 

D E C S I O N

 

No 893-L of 19 July 2018

 

ON APPROVING THE SUPPORT PROGRAMME FOR LEASING OF AGRIFOOD EQUIPMENT IN THE REPUBLIC OF ARMENIA

(title amended by No 95-L of 27 January 2022)

 

Based on part 4 of Article 146 of the Constitution of the Republic of Armenia, the Government of the Republic of Armenia hereby decides:

(Preamble amended by No 488-L of 15 April 2022)

1. To approve the Support Programme for leasing of agrifood equipment in the Republic of Armenia, pursuant to the Annex.

(point 1 amended by No 95-L of 27 January 2022, supplemented by No 488-L of 15 April 2022)

2. From 16 April 2022 to 31 December 2022, 10 percentage points of leasing provided in drams of the Republic of Armenia, 6 percentage points of leasing provided in foreign currency have been subsidised, and for economic entities carrying out activities in the territories of settlements of border communities receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014 — 12 percentage points of leasing provided in drams of the Republic of Armenia and 7 percentage points of leasing provided in foreign currency will be subsidised, where the acquired equipment would be operated in the same places.

(point 2 supplemented by No 488-L of 15 April 2022)

 

Prime Minister of the Republic of Armenia	N. Pashinyan
13 August 2018 Yerevan

 

Annex to Decision of the Government of the Republic of Armenia No 893-L of 19 July 2018

 

SUPPORT PROGRAMME

 

FOR LEASING OF AGRIFOOD EQUIPMENT IN THE REPUBLIC OF ARMENIA

(title amended by No 95-L of 27 January 2022)

 

INTRODUCTION

I. CHARACTERISTICS OF THE CURRENT STATE OF THE AGRIFOOD EQUIPMENT IN THE REPUBLIC OF ARMENIA AND ITS REFURBISHMENT

II. THE NECESSITY FOR IMPLEMENTATION OF THE PROGRAMME AND THE LEASING PRACTICE OF THE MEMBER STATES OF THE EURASIAN ECONOMIC UNION

III. THE GOAL AND OBJECTIVES OF THE PROGRAMME

IV. PROGRAMME DESCRIPTION

V. PROGRAMME MONITORING

VI. RISK ASSESSMENT FOR IMPLEMENTATION OF THE PROGRAMME

VII. FINANCIAL EVALUATION OF PROGRAMME IMPLEMENTAION

VIII. EXPECTED OUTCOMES FROM IMPLEMENTATION OF THE PROGRAMME

 

INTRODUCTION

 

1. Agriculture is one of the key sectors of economy of the Republic of Armenia, and the agro-processing sector is the driving force of agricultural development, which forms the market of agricultural products, contributes to development of rural areas and food safety of the country by offering the population high-quality and safe food.

2. One of the main prerequisites for the development of the agrifood sector, including agro-processing sector is increasing the efficiency of production of high-quality, low cost agricultural products meeting the necessary safety requirements and products obtained from their processing. Based on the imperatives of implementing the latter, as well as confronting the current challenges in market relations and offering high-quality and cost-competitive agrifood products in internal and external markets, the importance of retooling the existing capacities in the agrifood sector and equipping them with latest, modern equipment and technologies is highlighted, taking into account the fact that in most enterprises operating in the agrifood sector the amortisation periods set for most of the operated equipment have expired.

3. For the purpose of raising the competitiveness of the economy of the Republic of Armenia, including of the agro-processing industry, and ensuring economic growth, the Government of the Republic of Armenia implements an export-oriented industrial policy. Protocol Decision of the Government of the Republic of Armenia No 49 of 15 December 2011 has approved the Strategy for Export-oriented Industrial Policy of the Republic of Armenia, where viticulture, cognac industry, production of canned goods, mineral waters, meat and dairy products and juices are defined as priority areas.

4. The 2010-2020 Strategy of Sustainable Rural and Agricultural Development of the Republic of Armenia, approved by Decision of the Government of the Republic of Armenia No 1476-N of 4 November 2010, intends to improve the processing of agricultural raw materials through introduction of advanced technologies and raising the competitiveness of products, which will contribute to raising the level of food safety and increasing the export volumes and developing high-value agriculture.

5. Taking into account the insufficient level of supply and efficiency of latest, cut-edge equipment and technologies for economic entities of agrifood sector, high degree of their wear and tear, as well as additional costs for their periodic repairs, re-equipping farms with the latest equipment and raising their efficiency are currently considered issues of genuine concern.

6. Given the insufficiency of financial resources of economic entities in the agrifood sector, low profitability, it is considered advisable to resolve the mentioned issue by applying effective and affordable mechanisms, particularly leasing, which will enable the economic entities to increase the volume of capital investments through acquisition of fixed assets.

7. The implementation of the Support Programme for leasing of agrifood equipment in the Republic of Armenia (hereinafter referred to as "Programme") and public-private cooperation will create preconditions for promoting various forms of cooperation between the suppliers of equipment to be used for upgrade of the agrifood sector and economic entities in the agrifood sector and for raising the operability of the equipment.

(point 7 amended by No 95-L of 27 January 2022)

 

I. CHARACTERISTICS OF THE CURRENT STATE OF THE AGRIFOOD EQUIPMENT IN THE REPUBLIC OF ARMENIA AND ITS REFURBISHMENT

 

8. According to the outcomes of the agricultural census of 2014 in the Republic of Armenia, the number of farms engaged in livestock breeding has totalled to 181602 units, of which 181516 had a status of a natural person and 86 — of a legal person. According to data published by the Armenian National Statistical Service, the stock of bovine animals, sheep, goats and pigs has amounted to 1558,4 thousand heads, and the stock of birds — to 3814,2 thousand heads as of 1 January 2017. Of these, the share of farms having a status of a natural person and of a legal person totals, accordingly, to 1533.0 and 2091.0 and 25.4 and 1723.2 thousand heads. Pursuant to the data of the same source, as of 1 January 2017 the number of beehives in the Republic amounted to about 237.3 thousand pieces.

9. The analysis of the situation in the sector of industrial processing of animal raw materials has shown that the organisation of animal slaughter and the processing of animal raw materials for the purpose of food production is one of the problems faced by the food industry and requiring urgent solution. Slaughterhouses are the primary establishments for meat processing and their construction and operation solve a number of economic, veterinary and sanitary and environmental issues. The capacities and geographic distribution of about 20 slaughterhouses that currently operate are still insufficient for ensuring the mandatory slaughter of animals inside slaughterhouses.

10. To organise and promote the slaughter of animals in slaughterhouses, Decision of the Government of the Republic of Armenia No 142-N of 15 February 2018 sets out the areas of use and schedule of animal slaughter in the Republic of Armenia, according to which change towards slaughter inside slaughterhouses shall be made throughout the Republic. Given the necessity of building new slaughterhouses, the Fund "Small and Medium Entrepreneurship Development National Centre of Armenia" (SME DNC) in collaboration with the Food Safety Inspection Body adjunct to the Government of the Republic of Armenia carries out a programme for developing capacities of slaughterhouses, under which support will be provided to establishment of standard slaughterhouses and revitalisation of this business throughout the Republic.

11. Under this programme, the authors of the best slaughterhouse construction programmes will be granted a credit in the maximum amount of 5.0 mln Armenian drams, with a repayment period of up to 5 years, at an annual interest rate of 10 percent and 100 percent guarantee provided by the Fund "Small and Medium Entrepreneurship Development National Centre of Armenia" (SME DNC).

12. According to the outcomes of the agricultural census of 2014 in the Republic of Armenia, the number of farms engaged in crop production has totalled to 361064 units, of which 360611 have a status of a natural person and 453 — of a legal person. The number of agricultural lands belonging to rural households has amounted to 565.4 thousand hectares, of which the share of farms having a status of a natural and legal person is 513.0 and 52.4 thousand hectares, respectively.

13. According to the information published by the Armenian National Statistical Service, in 2017 the gross crop production product amounted to 468.4 million Armenian drams, which is 51.7 percent of the gross agricultural product.

14. For the purpose of raising the efficiency of crop production, increasing the volumes of fruit and vegetable production, replacing the imported agrifood production by local production, saving water resources, increasing the income of land users the Government of the Republic of Armenia has approved the Programme on subsidising the interest rates on loans for introducing anti-hail networks in the sector of agriculture of the Republic of Armenia, the Programme on subsidising the interest rates on loans for establishing in the Republic of Armenia intensive fruit orchards cultivated through modern technologies, and the Programme on subsidising the interest rates on loans for introducing drip irrigation systems.

15. Under the Programme on subsidising the interest rates of loans granted to the agricultural sector, approved by point 7 of Protocol No 39 of the sitting of the Government of the Republic of Armenia of 14 September 2017, the economic entities operating in the agrifood sector of the Republic may already acquire low-cost equipments, in particular, equipment for sorting, processing, packaging, storage of raw materials and other equipment, milking aggregates, water supply, manure removal, fodder chopper and fodder mixer machines, and the assistance provided by the programme may be directed to the acquisition of high value equipment.

16. Under point 31 of Protocol No 11 of the sitting of the Government of the Republic of Armenia of 16 March 2017, the State Support Programme of financial lease, i.e. leasing of agricultural machinery in the Republic of Armenia has been approved, which contributes to efficient use of agricultural soil types, organising of commodity production, reduction of tariffs on mechanised work and the costs price of agrifood production. During 2017, within the scope of the mentioned Programme, under the leasing agreement the rural households and communities were provided with 164 units of agricultural machinery, of which — 2 units of grain harvesters, 68 units of tractors and 94 units of other agricultural machinery.

17. The major part of fruit and vegetables produced in the Republic is sold fresh, including placed in the cold storage. The main part of fruit and vegetables to be exported is also placed in the cold storage for a while. According to the information obtained from the marzpetarans [regional governor’s offices] of the Republic of Armenia and the results of studies and analysis conducted, more than 1200 cold storage facilities with a capacity of about 52.0 thousand tons operate in the Republic. It becomes obvious from the comparison of cold storage capacities and fruit and vegetables production volumes that the seasonal supply of agricultural products significantly exceeds the market demand, and the shortage of cold storage capacities results in sharp fluctuations in market prices for agricultural products.

18. The approximate costs for the construction of cold storage facilities with cooling systems of European production, one cold store, providing a temperature of 0-ից +50, volume of 10 m x 20 m x 3.5m (700 m3) by applying a modular system (sandwiches) amount to about 26.5 million Armenian drams, which is impossible to implement under the Programme for subsidising the interest rates of loans granted to the sector of agriculture. Due to this, as well as for the purpose of raising the level of marketability of rural households, the importance of development of cold storage industry of the Republic, increasing the capacities and the volumes of cold preservation is highlighted.

19. According to the operational information provided to the Ministry of Agriculture of the Republic of Armenia, about 1220.0 hectares of greenhouse facilities operate in the Republic, of which 112.0 hectares are equipped with modern technologies. The products of greenhouse facilities have a great potential of export and their refurbishment with new equipment and increase of their capacities will contribute to development of the sector, increase in the competitiveness of local production and integration into new foreign sales markets.

(point 19 amended by No 421-L of 26 March 2020)

20. The agricultural products processing industry has an essential role and significance for the economy of the Republic, including in the process of development of the agrarian sector.

21. About 40 re-launched or newly established companies for production of canned fruits and vegetables, about 50 viticulture companies, about 70 diary- and meat-production companies, about 60 flour production companies, about 150 confectioneries and noodle production companies, more than 50 mineral and drinking water and non-alcoholic beverages production companies, 6 beer production companies, about 41 coffee and tea processing and packaging companies, 3 vegetable oil production companies, more than 500 bakeries, 8 fish farming companies, 2 sugar production companies, 2 salt production companies and about 350 natural and legal entities engaged in the production of dry products and spices operate in the food production sector of the Republic.

22. In 2017, the ratio of agricultural products processing industry in the total industry gross product has amounted to 36.3 percent, and in the processing industry — 58.1 percent.

23. Storage capacities installed in the fruit and vegetables processing companies of the Republic are about 250.0 thousand tons, of which the share of canned vegetables amounts to 154.5 thousand tons (61.8 percent), the share of canned fruits and berries and juices — 94.5 thousand tons (37.8 percent), the share of grape processing companies - about 265,0 thousand tons, the share of economic entities engaged in the production of dry products and spices — about 15.0 thousand tons, the share of dairy, including cheese production companies — about 490 thousand tons, and the share of meat production companies — about 50 thousand tons. Certain companies operating in the mentioned sectors have modern technologies and equipments installed, but most of the companies have technologies and equipments with high level of wear and tear, and even technologies and equipments of Soviet production and with expired amortisation period. The operation of the latter does not allow provision of high-quality, safe products competitive in price. Therefore, the technological upgrading of farms operating in the mentioned sectors is also a pressing issue.

24. The research, surveys and analysis conducted for economic entities of the sector of food industry by the Ministry of Agriculture of the Republic of Armenia to clarify the degree of wear and tear of used equipment, the demand for equipment upgrade (surveys were conducted in about 180 companies in different agro-processing sectors, and about 40 responses were received from them), has established that:

(1) they use different production equipment with degree of wear and tear from 5 to 70 percent, and in certain organisations they are still of the Soviet Union production, morally and physically worn out;

(2) in the past three years, 247 units of equipment costing about 1100.0 million Armenian drams were acquired at the expense of own funds, and 59 units of equipment costing about 550.0 million Armenian drams were acquired at the expense of credit funds. Credit funds channelled for acquisition of equipment were granted in USD with an annual interest rate starting from 4.2 percent, and in AMD with an annual interest rate of up to 20 percent, with a repayment period from 6 months to 7 years;

(3) in the past three years 37 units of equipment costing in total 125.0 million Armenian drams were acquired under leasing; they were provided at an annual interest rate from 11 to 12.75 percent, with advance payment from 30 to 38 percent of the cost of the subject of lease and repayment period from 1 to 5 years;

(4) their demand for acquisition of equipment under leasing is more than 300 units, and the cost is about 10000.0 million Armenian drams. Moreover, the preferable conditions for acquisition thereby of the equipment under leasing are an annual interest rate from 1 to 5 percent, an advance payment from zero to twenty percent of the cost of the subject of lease and repayment period from 1 to 20 years.

25. Certain insight into the creditworthiness level and credit burden of the agricultural products processing industry may be gained by taking into consideration that as of 1 February 2017 about 590 credits are serviced by economic entities in the sector of production of meat, dairy products, canned fruits and vegetables and beverages, the balance of the principal amount of which amounts to about 64.5 billion Armenian drams. The credits are granted both in Armenian dram and foreign currency, with interest rates ranging from 12.3 to 14.2 percent for credits in Armenian drams and from 8.8 to 11.2 percent — for credits in foreign currency. In addition to their use for replenishing the circulating assets, the existing credits were also used for technical upgrade and other needs. It should be stated that the majority of economic entities operating in the sector is not interested in making investments at the expense of credit funds to acquire new equipment, as the annual interest rates of credits granted are high, the conditions for granting credits are not affordable, and on the other hand, due to limited production and sales volumes, the process of return on income is lengthy.

26. Summarisation of the responses to requests made by the Ministry of Agriculture of the Republic of Armenia to commercial banks and universal credit organisations of the Republic has shown that "Ameriabank" and "AGBA Leasing" Closed Joint-Stock Companies and "Development and Investments Corporation of Armenia" Universal Credit Organisation Closed Joint-Stock Company provide equipment to economic entities of the agrifood sector under leasing.

27. "Ameriabank" Closed Joint-Stock Company provides equipment to economic entities under leasing in the amount of 40.0 million Armenian drams or its foreign currency (USD, EURO) equivalent, subject to the following conditions: at an annual interest rate of 11 percent in case of Armenian drams and at annual interest rates of 7 and 6 percent, respectively, in case of USD and Euro, with advance payment from zero to 30 percent of the cost of the subject of lease and repayment period from 6 to 15 years. The servicing fee of leasing amounts to 0.3 percent, maximum 0.5 million Armenian drams (charged once a year from the residual amount of the leasing).

28. "AGBA Leasing" Closed Joint-Stock Company provides equipment to economic entities under leasing, subject to the following conditions: at an annual interest rate of 12 to 14 percent in case of Armenian drams and at annual interest rates of 9 to 11 percent in case of a foreign currency, with advance payment of 20 percent of the cost of the subject of lease, repayment period of up to 5 years, mandatory annual insurance premium of 0.43 percent (from the overall price of the equipment for the first year and from the residual amount under the leasing contract for each subsequent year).

29. "Development and Investments Corporation of Armenia" Universal Credit Organisation Closed Joint-Stock Company provides electric dryers under leasing in Armenian drams at an annual interest rate of 12 percent, with advance payment of at least 20 percent of the cost of the subject of lease and repayment period of maximum 1 year.

30. The economic entities are gradually adapting to the conditions of market economy, and certain organisations successfully compete in the domestic market and markets of the CIS countries, as well as international food markets; however, re-equipping farms in a faster pace with new equipment necessary therefor is an urgent issue for improving labour efficiency and raising the competitiveness of manufactured products, diversification of production and solving other difficulties. The problems existing during re-equipping of farms are caused by the meagre financial resources of economic entities, accumulated credit burden, non-preferential interest rates and terms of the credit funds granted, lack of free collateral, as well as other factors.

 

II. THE NECESSITY FOR IMPLEMENTATION OF THE PROGRAMME AND THE LEASING PRACTICE OF THE MEMBER STATES OF THE EURASIAN ECONOMIC UNION

 

31. In most farms operating in the agrifood sector of the Republic of Armenia the amortisation periods set for most of the operated equipment have expired, and in certain farms although the useful life of the equipment has not expired, they lack the capacity of producing products in the required volume or give no opportunity of entering new target markets or expanding the range of products introduced in operating markets. Due to depreciation of equipments, the additional repairs and maintenance costs increase, leading to:

(1) decrease in the level of labour productivity;

(2) increase in the prime cost of manufactured products;

(3) increase in production and technological losses;

(4) disruptions in stocking agricultural raw materials and normal operation of the economy;

(5) increase in repairs and maintenance costs;

(6) violation of contractual terms for the purchase of raw materials or supplies of finished products;

(7) decrease in competitiveness of manufactured products.

32. Difficulties existing in the process of re-equipping the farms operating in the agrifood sector with equipment are mainly due to meagre financial resources thereof, high prices for imported equipment and inaccessible mechanisms for their supply, imperfection of the existing mechanisms, high interest rates of credits, lack of free collateral and other factors.

33. Experience in purchasing equipment under leasing in the EAEU member states:

(1) Russian Federation:

In the Russian Federation state support is mostly focused on small and medium-size businesses. The granting of advance payments, subsidisation of interest rates, leasing fees are considered to be the main forms of support.

The 2013-2020 State Programme for the Development of Agriculture and Regulation of the Markets of Agricultural Products, Raw Materials and Food was approved by Decision of the Government of the Russian Federation No 717 of 14 July 2012; this Programme is intended to develop the market of agricultural machinery and equipment by providing financial lease, i.e. leasing services to organisations operating in the agricultural sector of Russian Federation. Leasing services are provided for agricultural machinery and equipment, including livestock breeding equipment and for pedigree livestock breeding.

Leasing under the mentioned Programme is provided by "Rosagroleasing" CJSC, 99,99 percent of the shares of which belong to Russian Federation, and the statutory capital of which amounts to 83 billion Russian Federation roubles.

The Federal leasing is provided under the following conditions: repayment period of 10 years, annual interest rate of 3.5 percent for agricultural machinery and equipment, and annual interest rate of 1.5 percent for pedigree animals.

The effectiveness of application of the leasing mechanism in the process of technical and technological upgrade of organisations operating in the sector of agriculture is proven by the fact that in 2017 the mechanism for subsidising leasing fees was implemented in 54 regions of the Russian Federation, compared to 10 regions in 2010. In 2016, the volume of financial means allocated for leasing purposes amounted to 19.6 billion Russian Federation roubles (about 170.0 billion Armenian drams), and in 2015 — to 12.1 billion Russian Federation roubles (about 105.0 billion Armenian drams).

(2) Republic of Belarus:

By Decree of the President of the Republic of Belarus No 35 of 24 January 2011, the 2011-2015 Republican Programme on equipping the organisations of agro-industrial complex with modern machinery and equipment, their construction, repair, modernisation of production facilities of those organisations was approved; the volume of financial means allocated in 2011-2015 for the purpose of implementation of that Programme amounts to 21950.2 billion Belarusian roubles (about 526.0 billion Armenian drams), of which the subsidised volume allocated from the Republican Budget amounts to 610.0 billion Belarusian roubles (more than 14.6 billion Armenian drams), the volume of special-purpose financing (subvention) allocated from the local budget — 2650.0 billion Belarusian roubles (about 64.0 billion Armenian drams), credit funds granted by the banks — 18390.2 billion Belarusian roubles (more than 440.6 billion Armenian drams) and own funds invested by organisations of

agro-industrial complex — 300.0 billion Belarusian roubles (more than 7.0 billion Armenian drams).

Additionally, on the basis of Decree of the President of Republic of Belarus No 146 of 2 April 2015, in 2015-2016 legal persons of the Republic of Belarus may, without tender, at the expense of own, budget and/or borrowed funds, acquire by leasing contract modern machinery and equipment manufactured in the territory of the Eurasian Economic Union under the following conditions:

a. repayment period of up to 8 years, without payment of annual interest rate of leasing for organisations of agro-industrial complex, advance payment in the amount of minimum 10 percent of the cost of the subject of lease of organisations of agro-industrial complex;

b. annual insurance of the subject of lease against the risks of damage and loss (CASCO);

c. payment per annum, bank guarantee, pledge or surety.

(3) Republic of Khazakhstan:

The Programme on provision by the Government of the Republic of Khazakhstan of agricultural machinery and equipment to agrarian sector under leasing is implemented by "Khazagrofinance" Joint-Stock Company, which has, over the entire period of its activity, financed acquisition of more than 39.0 thousand units of agricultural machinery and agro-processing equipment costing 434.5 billion Kazakhstani tenge (about 43450.0 billion Armenian drams).

Leasing is financed under the following conditions:

a. for equipment not requiring installation — up to 10 years of repayment period, annual interest rate of 14.5 percent, advance payment in the amount of 15 percent of the cost of the subject of lease, without collateral, a grace period of up to 2 years for the repayment of the principal amount of credit and up to 1 year for payment of interest rates, the repayment of principal amount is made at least once a year, and the payment of the interest rate — at least once a quarter;

b. for machinery and equipment requiring installation — up to 10 years of repayment period, annual interest rate of 14.5 percent, advance payment in the amount of 15 percent of the cost of the subject of lease, during the entire term of the leasing contract, the building, construction and the land plot, on which the subject of lease is installed, are pledged, a grace period of up to 2 years for the repayment of the principal amount of credit and up to 1 year for payment of interest rates.

No pledge of a building, construction or a land plot is required, where the lessee pays an advance payment in more than 25 percent of the cost of the subject of lease or, the subject of lease, in the case of its dismantling, does not lose its price and quality characteristics, occupies more than 50 percent of the installation area, and the cost of the building, construction and land plot significantly exceeds the cost of the subject of lease.

(4) Kyrgyz Republic:

Law of the Kyrgyz Republic “On financial lease (leasing)” adopted in 2002 contributed to the development of activities in the sector of leasing of the Kyrgyz Republic, and the effective development of leasing relations was ensured by the business development programme implemented by the Kyrgyz Mission of the US Agency for International development (USAID).

In 2013, 632 transactions for provision of agricultural machinery and equipment costing more than 12.0 million USD were conducted in the Kyrgyz Republic, exceeding the same indicators of 2012 by 5.8 million USD and 285 transactions.

Leasing is financed under the following conditions: repayment period from 6 months to 5 years, annual interest rate from 12 to 28 percent, advance payment in the amount of minimum 20 percent of the acquisition price of the subject of lease, the subject of lease, and in certain case also additional tangible and intangible property are pledged, the insurance of the advance payment in the amount of 1 percent of the cost of the subject of lease and the insurance of the subject of lease is mandatory for formalisation of the lease.

 

III. THE GOAL AND OBJECTIVES OF THE PROGRAMME

 

34. The main goal of the Programme shall be supplying equipment to economic entities of the agrifood sector under affordable condition, in particular through application of leasing mechanisms, which will create preconditions for increasing the production volumes of agricultural products and their derivative products, ensuring qualitative and safety requirements in compliance with international standards, raising the competitiveness, increasing the export volumes, as well as replacing the import products with domestic products.

(point 34 amended by No 95-L of 27 January 2022)

35. The main objectives of the Programme shall be:

(1) offering affordable leasing mechanisms for the supply of equipment of agrifood sector;

(2) offering an alternative option for acquisition of new equipment given the high interest rates on granted credits and unaffordable conditions;

(3) identifying the equipment groups to be provided;

(4) assessment of the investments required for equipment and their subsidised portion;

(5) clarifying the type of subsidisation in the process of leasing the equipment;

(6) offering a monitoring mechanism over the implementation of the programme;

(7) assessment of the Programme risks.

 

IV. PROGRAMME DESCRIPTION

 

36. The assessment of the current state of outfitting of the agrifood sector has shown that drafting of targeted programmes for re-equipping with technical facilities and their implementation, implementation of state support policy with the use of new approaches and mechanisms for the issue are sector priorities.

37. The Programme shall aim at offering the most accessible and efficient approaches for acquisition of technical facilities, flow lines, tools, greenhouse constructions and other equipment for economic entities of the agrifood sector.

(point 37 amended by No 421-L of 26 March 2020)

38. The Programme will be implemented using the following main approaches:

(1) the equipment to be provided to the economic entities of agrifood sector under the Program will be acquired from manufacturing and/or selling companies, which, on their own or through their guaranteed legal persons that are residents of the Republic of Armenia, will also carry out warranty and/or post-warranty maintenance of the equipment;

(2) within the scope of the Programme, the equipment will be provided to economic entities under a leasing contract;

(3) under the Programme, starting from 2018, the interest rate of leasing for economic entities that acquire equipment of agrifood sector and have concluded a leasing contract shall be partially subsidised during the contract validity period, within the framework of leasing contracts concluded under the Programme;

(3.1) starting from 2019, there will be a partial subsidy on advance payments for equipment acquired under the Programme by economic entities engaged in fish farming to ensure alternative use of water resources, particularly the air lift system, aerator (oxygen enrichment device), blower with outdoor sound cabinet, sterilising bio- and mechanical filters;

(3.2) under the Programme, there will be a partial subsidy on advance payments for leasing of a mobile and/or a mobile modular slaughterhouses

(in numbers shown in Table No 2) acquired by economic entities from 1 July 2020 to 1 December 2020 to install the network of slaughterhouses mapped by the Ministry of Economy of the Republic of Armenia in the target communities; moreover, in order to accelerate the operation of slaughterhouses in communities provided in Table No 2, the advance payments necessary for leasing of used mobile slaughterhouses that are being acquired and are in good technical order and operable will also be subsidised;

(4) taking into consideration the assessment by the Ministry of Agriculture of the Republic of Armenia of the demand for acquisition of equipment provided for by the leasing contract for economic entities of agrifood sector of the Republic, the economic entities will, under the Programme, be provided with equipment used in the following sectors:

a. livestock breeding, including cattle breeding, sheep breeding, pig breeding, poultry breeding, bee breeding, fish breeding, industrial animal husbandry, snail breeding;

b. horticulture, including greenhouse farming;

c. cold storage, including milk storage stations and insulated tanks transporting milk;

d. sorting, packaging and filtering of fresh fruits, vegetables and legumes and filtering of legumes;

e. slaughterhouse farm, mobile and mobile modular slaughterhouses, as well as means of transportation for carcasses acquired by the slaughterhouse service provider;

f. agro-processing industry;

g. other areas of agrifood activity.

(4.1) in addition to the equipment used in the sectors indicated in sub-point 4 of point 38 of this Programme, the economic entities will also be provided with truck cranes and metal containers for storing raw materials and products accounted for as fixed assets, and oak containers used in the sector of winemaking.

(point 38 supplemented by No 190-L of 7 March 2019, No 1157-L of 29 August 2019, No 1957-N of 26 December 2019, No 135-L of 6 February 2020, amended by No 421-L of 26 March 2020, supplemented by No 1162-L of 2 July 2020, No 1234-L of 27 July 2020, No 180-L of 11 February 2021, edited, supplemented by No 95-L of 27 January 2022)

39. The following shall be the participants of the Support Programme for leasing of agrifood equipment:

(1) economic entities in the agrifood sector having concluded a leasing contract for acquisition of equipment in accordance with the terms of this Programme (natural persons, individual entrepreneurs and legal persons, including agricultural cooperatives), that meet the financial (creditworthiness) requirements of the bank or credit organisation involved in the Programme (hereinafter referred to as “financial institution” or “FI”);

(2) any FI that meets the requirements of this Programme and provides economic entities with equipment under leasing in accordance with the terms of this Programme;

(3) Rural Financing Institution (hereinafter referred to as "RFI") of the State Agency "Rural Areas Economic Development Programme Implementation Unit" of the Ministry of Agriculture of the Republic of Armenia;

(4) Ministry of Economy of the Republic of Armenia.

(5) (sub-point repealed by No 190-L of 7 March 2019)

(point 39 edited, amended by No 190-L of 7 March 2019, supplemented by No 336-L of 4 April 2019, amended by No 1157-L of 29 August 2019, No 95-L of 27 January 2022)

40. The following shall be the terms of the Support Programme for leasing of agrifood equipment:

(1) under the Programme, the leasing contract shall be concluded for a repayment period of up to 5 years inclusive;

(2) leasing shall be provided in drams of the Republic of Armenia, at the effective annual interest rate of up to 12 percent, up to 10 percentage points of which is subsidised, and in foreign currency — at the effective annual rate of up to 9 percent, up to 6 percentage points of which is subsidised, and for economic entities operating in the territories of border settlements receiving social assistance, approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014, the leasing interest rate is fully subsidised, and the annual leasing interest rate paid by the lessee is 0 percent;

(2.1) no other fees for FI services related to leasing (service fee, commissions, other fees) are charged;

(3) the lessee shall pay an advance payment in the amount of 20 percent of the cost of the subject of lease;

(3.1) 50 percent, but not more than 6.0 million Armenian drams of the advance payment of 20 percent required for acquisition of equipment for the purpose of ensuring alternative use of water resources by economic entities engaged in fish farming;

(3.2) each economic entity engaged in fish farming may only once use the subsidy of 50 percent of the advance payment in the amount of 20 percent required for acquisition of equipment for the purpose of ensuring alternative use of water resources;

(3.3) 75 percent, but not more than 4.8 million Armenian drams of the advance payment in the amount of 20 percent required for leasing mobile and/or mobile modular slaughterhouses acquired by economic entities to install them in the communities provided in Table No 2, is subsidised;

(4) the cost of the subject of lease includes the acquisition price of the subject of lease, the costs related to the import of the subject of lease to the Republic of Armenia (transpiration, including other costs related to transportation, customs clearance, value added tax, etc.);

(5) under the Programme, the sum total of the costs of equipment acquired by each lessee should not exceed 1000.0 million Armenian drams, except for the lessees of the areas of activities indicated in paragraphs "d" and "e" of sub-point 4 of point 38, the sum total of the costs of equipment acquired whereby should not exceed 200.0 million Armenian drams;

(5.1) in case the slaughterhouse is constructed and installed by the contractor on the basis of trilateral contract concluded between the FI, the contractor and the beneficiary, the slaughterhouse as a whole (including the land plot, on which the slaughterhouse is constructed), equipped with the necessary equipment, may be considered as a subject of lease. In this case, the slaughterhouse construction design and veterinary and sanitary requirements shall be agreed in advance with the Food Safety Inspection Body of the Republic of Armenia;

(5.2) in case the greenhouse is constructed and installed by the contractor on the basis of trilateral contract concluded between the FI, the contractor and the beneficiary, the greenhouse as a whole (including the land plot, on which the greenhouse is constructed), equipped with necessary equipment, may be considered as a subject of lease (except for the case, where the greenhouse is constructed under the "State Support Programme for introduction of small and medium-sized greenhouse facilities" approved by Decision of the Government of the Republic of Armenia No 1612-L of

14 November 2019);

(5.3) in case the cold–store or storage facility of agricultural significance is constructed and installed by the contractor on the basis of trilateral contract concluded between the FI, the contractor and the beneficiary, the cold-store or storage facility of agricultural significance as a whole (including the land plot, on which the cold-store or storage facility of agricultural significance is constructed), equipped with necessary equipment, may be considered as a subject of lease;

(6) in case the structure (construction) constitutes the integral part of the technological equipment acquired under leasing, including the slaughterhouse with a prefabricated structure (construction), the structure may be considered as a subject of lease;

(7) during the entire period of validity of the leasing contract, the subject of lease shall be mandatorily insured against the risks of damage and loss at the expense of FIs;

(8) the grace period set for repayment of the principal amount of leasing shall be calculated for maximum three months from the moment the lease is granted. In addition, the FIs may, upon the application of the lessee, establish deferment periods for payment of the principal amount of leasing with a repayment period of up to 6 months;

(8.1) the obligation to pay the unsubsidised interests of leasing shall arise for the lessee from the moment of conclusion of the leasing contract;

(8.2) subsidisation of the interest rate of leasing shall start from the moment of conclusion of the leasing contract;

(8.3) calculation of the amount of subsidisation of the interest rate of leasing:

a. starting from the day of payment of the above sums and until the day of signing the acceptance and transfer acts of the subject of lease, an interest shall be accrued on the positive difference between the amounts paid by FI (equivalent Armenian drams in case of a foreign currency) for acquisition of the subject of lease under the leasing contract and amounts paid by the lessee as an advance payment, and it may not exceed the annual interest rate set in the leasing contract;

b. the interest amount calculated in paragraph "a" of this sub-point shall be subsidised only one-time after signing the acceptance and transfer act of the subject of lease, under the procedure defined by the Programme. Moreover, the subsidisation of the supply phase shall be performed for a period of up to 180 days starting from the day of conclusion of the leasing contract, and the obligation of paying interests for a period exceeding 180 days shall be borne by the lessee;

c. in case the subject of lease is not supplied or the acceptance and transfer act is not signed due to other circumstances, the interest rate indicated in paragraph "b" of this sub-point shall not be subject to subsidisation, and the obligation to pay the interest rate shall be borne by the lessee;

(9) transfer by the RFI of the subsidised amount of the interest rate of leasing to the FI may be made within 3 months from the moment of granting the leasing, then every month;

(10) in case of early repayment of the principal amount of leasing and the interest rate of leasing, if so desired by the lessee, no penalties and/or fines shall be levied;

(11) penalties and/or fines shall not be subject to subsidisation;

(12) the amount of interest payment shall be calculated against the balance of the principal amount of leasing;

(13) the principal amount of leasing shall have no minimum threshold;

(14) under the Programme, 15 billion Armenian drams of the principal amount of leasing shall be planned to be allocated for acquisition of equipment worth up to 35 million Armenian drams.

(point 40 supplemented, edited, amended by No 190-L of 7 March 2019, supplemented by No 1157-L of 29 August 2019, No 135-L of 6 February 2020, No 421-L of 26 March 2020, No 1162-L of 2 July 2020, amended by No 180-L of 11 February 2021, supplemented, amended by No 1400-L of 27 August 2021, amended, edited, supplemented by No 95-L of 27 January 2022, amended by No 488-L of 15 April 2022)

41. The subsidisation process of the interest rate of leasing under the Programme shall be carried out as follows:

(1) the process of subsidisation of the leasing interest rate shall be initiated by the FIs that carry out leasing transactions in accordance with the terms of this Programme;

(2) the repayment of the amount of the leasing contract shall be carried out as per months, by means of equal payment of the principal amount; the leasing interest rate shall be calculated according to the balance of the principal amount;

(3) The Ministry of Economy of the Republic of Armenia shall, within 5 days, transfer to a special account of the RFI the amount designated for partial subsidisation for the first month after the launch of the Programme, and transfers for the subsequent months shall be made on the basis of reports received from the RFI;

(4) the leasing interest rate shall be subsidised on the basis of actual repayments of the principal amount of leasing and the non-subsidised part of leasing interest rate;

(5) the amount of subsidisation of the leasing interest rate shall be transferred by the RFI to the relevant account of the FI based on the request of the FI. The requirements to the content of the request shall be defined by the contract concluded between the RFI and the given FI;

(6) the FI shall submit the request on subsidisation of the leasing interest rate to the RFI once a month, not later that on the fifth working day of the following month. The RFI shall be obliged to uphold the request within ten working days after receiving the request and transfer the amount of subsidisation of the leasing interest rate to the account of the relevant FI, provided that the request complies with the requirements of the Programme. In case the request does not comply with the requirements of the Programme, the RFI shall be obliged to notify the FI within three working days, indicating the reasons for non-compliance;

(7) the FI shall, within one working day following the day of receipt of the request on granting leasing, submit to the e-mail address “secretariat@miոecօոօmy.am” of the Ministry of Economy of the Republic of Armenia information thereon, including the following data: name of the lessee, the range of equipment to be acquired, name of the manufacturing and/or selling company, in case of involving a contractor — also the name of the contractor and the cost of the subject of lease.

(8) In case no objection to the information obtained in accordance with sub-point 7 of point 41 of this Programme is received from the Ministry of Economy of the Republic of Armenia within one day, the positive position of the Ministry of Economy of the Republic of Armenia shall be considered as issued, and the FI shall initiate the process of examining the request on granting leasing.

(point 41 amended by No 1157-L of 29 August 2019, supplemented by No 135-L of 6 February 2020)

41.1. Subsidisation of advance payments required for equipment acquired under the Programme by economic entities engaged in fish farming to ensure alternative use of water resources shall be carried out under the following procedure:

(1) the subsidisation process shall be initiated by the economic entity engaged in fish farming; before submitting to the FI a relevant request on equipment acquired to ensure the alternative use of water resources, the mentioned economic entity shall submit, in accordance with Form No 1, an electronic or hard copy of a relevant application to obtain consent for subsidising the advance payment to the Ministry of Economy of the Republic of Armenia, attaching to the application a document certifying the cost of the acquired equipment and the technical specifications of the equipment provided by the company manufacturing and/or selling the acquired equipment;

(2) The Ministry of Economy of the Republic of Armenia shall, within five working days after registration of the application indicated in sub-point 1 of this point, provide to the applicant a written response on consent or rejection;

(3) the consent indicated in sub-point 2 of this point shall be provided, where the applicant has submitted the documents provided for by sub-point 1 of this point on equipment indicated in sub-point 3.1 of point 38 of this Programme;

(4) the rejection indicated in sub-point 2 of this point shall be provided, where the documents defined by sub-point 1 of this point contain irregularities, or submitted documents contain equipment not indicated in sub-point 3.1 of point 38 of this Programme;

(5) after receiving the consent provided under sub-point 1 of this point, the beneficiary shall submit to the FI the consent, together with the request;

(6) after acceptance of the request on leasing and payment by the beneficiary to the FI of the advance payment in the amount of 10 percent of the cost of the equipment acquired, the beneficiary shall submit a request to the Ministry of Economy of the Republic of Armenia in accordance with Form No 2 to receive the amount of the advance payment to be subsidised, calculated for the acquired equipment, which is accompanied by a relevant document provided by the FI, substantiating the payment of the advance payment in the amount of 10 percent of the cost of the acquired equipment;

(7) the Ministry of Economy of the Republic of Armenia shall, within ten working days following the receipt of the relevant request in accordance with Form No 2 indicated in sub-point 6 of this point, transfer the amount of the advance payment to be subsidised, calculated for the acquired equipment, to the relevant account of the beneficiary operating in the FI;

(8) the lessee shall, within five working days after completion of the installation works of the equipment and operation of the system, submit to the Ministry of Economy of the Republic of Armenia information on the launch of the system.

(point 41.1 supplemented by No 1157-L of 29 August 2019)

41.2. Subsidisation under the Programme of the advance payment required for leasing of mobile and/or mobile modular slaughterhouses acquired by the economic entities to install in the communities provided in Table No 2 shall be carried out under the following procedure:

(1) the subsidisation process shall be initiated by the economic entity that shall, before submission to the FI of a request on mobile and/or mobile modular slaughterhouses acquired to install in the communities provided in Table No 2, submit an electronic and/or hard copy of an application in accordance with Form No 3 to the Ministry of Economy of the Republic of Armenia to obtain consent for subsidising the advance payment of leasing, attaching to the application documents certifying the cost of the acquired mobile and/or mobile modular slaughterhouses provided by the organisation manufacturing and/or selling the acquired mobile and/or mobile modular slaughterhouses, including a price proposal or a preliminary invoice and a certificate on registration of the slaughterhouse (if available) provided by the Food Safety Inspection Body of the Republic of Armenia;

(2) the Ministry of Economy of the Republic of Armenia shall submit to the applicants, within five working days, a written response on consent or rejection in relation to the applications indicated in sub-point 1 of this point and registered before or after seven days following the publication of this decision;

(3) the consent indicated in sub-point 2 of this point shall be provided, where the applicant has submitted the application in accordance with sub-point 1 of this point;

(4) where several applications registered within seven days following the publication of this decision are received for the purpose of installing a mobile and/or a mobile modular slaughterhouse in the same community provided in Table No 2, the preference for providing consent shall be given to the applicant that runs a slaughterhouse in the territory of the marz of the community provided in Table No 2 and expects to receive an advance payment in the lesser amount than the subsidised advance payment of leasing prescribed by sub-point 3.3 of point 40 of this Programme for installing a mobile and/or a mobile modular slaughterhouse;

(5) where applications exclusively from other marzes registered within seven days following the publication of this decision are received for the purpose of installing a mobile and/or a mobile modular slaughterhouse in the same community provided in Table No 2, the preference for providing consent shall be given to the applicant that runs a slaughterhouse in the territory of the marz adjacent to the marz of the community provided in Table No 2 and expects to receive an advance payment in the lesser amount than the subsidised advance payment of leasing prescribed by sub-point 3.3 of point 40 of this Programme for installing a mobile and/or mobile modular slaughterhouse;

(6) where the applications registered within seven days following the publication of this Decision and received for the purpose of installing a mobile and/or a mobile modular slaughterhouse in the same community provided in Table No 2 do not contain applications from the given community or adjacent marzes, the preference for providing consent shall be given to the applicant that expects to receive a subsidised advance payment in the lesser amount than the subsidised advance payment of leasing prescribed by sub-point 3.3 of point 40 of this Programme for installing a mobile and/or mobile modular slaughterhouse;

(7) the Ministry of Economy of the Republic of Armenia shall provide a written response on consent to the first applicant in relation to the applications registered for the purpose of installing a mobile and/or mobile modular slaughterhouse in the community provided in Table No 2 in the period starting after seven days following the publication of this Decision to 31 December 2020;

(8) the rejection indicated in sub-point 2 of this point shall be provided, where:

a. the application prescribed by sub-point 1 of this point is submitted incomplete, or the submitted application is inconsistent with the Form No 3 prescribed by sub-point 1 of this point, or the price proposal or preliminary invoice indicated in sub-point 1 of this point is missing;

b. the Ministry of Economy of the Republic of Armenia has already provided a written response on consent to another applicant in cases defined by sub-point 3 of this point for the purpose of installing a mobile and/or a mobile modular slaughterhouse in the community provided in Table No 2 and preferable for the applicant;

(9) after receiving the consent provided by sub-point 1 of this point, the beneficiary shall, within three working days, submit to the FI the consent, together with the request;

(10) after submitting a request on leasing and paying to the FI the advance payment in the amount of unsubsidised value of the advance payment of 20 percent of the cost of the acquired mobile and/or mobile modular slaughterhouses, the beneficiary shall submit a request in accordance with Form No 4 to the Ministry of Economy of the Republic of Armenia to obtain the amount of the advance payment to be subsidised, calculated for leasing of the acquired mobile and/or mobile modular slaughterhouses. A relevant document provided by the FI substantiating the payment of the advance payment in the amount of unsubsidised value of the advance payment of 20 percent of the cost of the acquired mobile and/or mobile modular slaughterhouses shall be attached to the request submitted;

(11) The Ministry of Economy of the Republic of Armenia shall, within three working days following the receipt of the relevant request in accordance with Form No 4 indicated in sub-point 8 of this point, transfer the amount of the advance payment to be subsidised, calculated for leasing the acquired mobile and/or mobile modular slaughterhouses to the relevant account of the beneficiary operating in the FI;

(12) the lessee shall, within five working days after concluding the leasing contract and providing the lessee with mobile and/or mobile modular slaughterhouses, submit to the Ministry of Economy of the Republic of Armenia information on acquisition of mobile and/or mobile modular slaughterhouses.

(point 41.2 supplemented by No 1162-L of 2 July 2020)

42. Termination of subsidisation of the leasing interest rate:

(1) the subsidisation of the leasing interest rate shall be terminated, where the lessee has overdue obligations towards the FI for more than 90 days in aggregate in the period of one year (previous 12 months) with respect to the given leasing, or as a result of the overdue obligations towards the FI, the leasing shall not be classified into standard class in accordance with the current procedure for the classification of leases;

(2) the subsidisation of the leasing interest rate shall be terminated if the monitoring reveals a violation of the terms of this Programme;

(3) the subsidisation shall be terminated under this Programme starting from the day of the previous repayment by the creditor set by the credit repayment schedule;

(4) in cases the credit is used by the lessee inappropriately and/or in a manner inconsistent with the conditions of the subsidisation, the amount of subsidisation provided up to that point shall be subject to return. The return of the amount of subsidisation to the RFI shall be carried out by the FI.

(point 42 edited by No 190-L of 7 March 2019, amended by No 180-L of 11 February 2021, No 488-L of 15 April 2022)

42.1. The amount of the subsidised advance payment required for equipment acquired for the purpose of alternative use of water resources shall be subject to return by the lessee, where the equipment has been acquired in violation of the terms of this Programme, or the acquired equipment fails to provide the process of alternative use of resources indicated in sub-point 3.1 of point 38 of this Programme, or the lessee has failed to submit to the Ministry of Economy of the Republic of Armenia the information required by sub-point 8 of point 41.1 of this Programme.

(point 42.1 supplemented by No 1157-L of 29 August 2019)

42.2. The amount of the advance payment of the subsidised leasing required for mobile and/or mobile modular slaughterhouses acquired to install in the communities provided in Table No 2 shall be subject to return by the lessee, where the mobile and/or mobile modular slaughterhouses are acquired in violation of the terms of this Programme, or the lessee has failed submit to the Ministry of Economy of the Republic of Armenia the information required by

sub-point 10 of point 41.2 of this Programme.

(point 42.2 supplemented by No 1162-L of 2 July 2020)

 

V. PROGRAMME MONITORING

 

43. Programme monitoring shall be carried out by the Ministry of Economy of the Republic of Armenia, the RFI on the basis of the information provided by the FI and creditor sampling. The types of monitoring, i.e. documentation, visits and requests, directions, scope and parameters of compliance with the goals shall be defined under the internal procedure developed by the RFI.

(point 43 amended by No 190-L of 7 March 2019, No 1157-L of 29 August 2019)

44. In case the monitoring conducted by the Ministry of Economy of the Republic of Armenia or the RFI reveals a violation of the terms of this Programme, an appropriate opinion thereon shall be drawn up, and this shall be notified to each other and the FI.

(point 44 amended by No 190-L of 7 March 2019, No 1157-L of 29 August 2019)

45. As a result of summarisation the requests for subsidisation of leasing interest rates, the RFI shall set up a statistical database which includes the information on subsidised lease interest rate related to the programme implementation, the identified issues and implementation challenges.

46. The RFI shall, once a month, submit a report on the progress of the Programme to the Ministry of Economy of the Republic of Armenia.

(point 46 amended by No 1157-L of 29 August 2019)

47. The report shall contain detailed information on the progress of the Programme, including:

(1) information on leasing contracts by marz, community, settlement, economic entities, equipment quantity, amount, amount of subsidisation of the leasing interest rate by specific equipment;

(2) information on monitoring results;

(3) information on the violations revealed;

(4) recommendations regarding the improvement or refinement of the terms of the Programme, etc.

 

VI. RISK ASSESSMENT FOR IMPLEMENTATION OF THE PROGRAMME

 

48. In the Republic of Armenia the re-equipping of farms of the agrifood sector with equipment shall include a number of risks, in particular:

(1) miscalculation of equipment refurbishment priorities by farms;

(2) miscalculation by commercial banks and credit organisations of priorities of the re-equipping needs of economic entities and re-equipment possibilities;

(3) failure to provide the lessees with expected revenues due to difficulties in, slow pace of sales of finished products produced by farms, and other factors;

(4) temporary suspension or termination of the activities of economic entities due to natural and climatic, macroeconomic and sales market structure changes and other factors.

49. Programme implementation risks shall be the following:

(1) low solvent demand for agrifood equipment;

(2) offering inefficient options for implementation of the Support Programme for leasing of agrifood equipment ;

(3) choosing inefficient ways to subsidise the leasing of equipment;

(4) overestimation of resources expected for subsidisation of the leasing interest rate;

(5) failure to provide the income expected by lessees due to natural and climatic and other factors;

(6) difficulties in importing agrifood equipment to the Republic of Armenia and considerable contingency expenses for their transportation.

(point 49 amended by No 95-L of 27 January 2022)

50. Risk mitigation options shall be the following:

(1) offering affordable supply mechanisms under the leasing contract for agrifood equipment;

(2) cooperation with organisations that are members of the Eurasian Economic Union and manufacture agrifood equipment in third countries, with reputable organisations that import equipment to the Republic of Armenia and have experience in providing equipment under leasing contract and giving prompt solutions to issues having arisen;

(3) reserving to the supplier the observance of the deadlines for import to the Republic of Armenia, installation and operation of agrifood equipment.

 

VII. FINANCIAL EVALUATION OF PROGRAMME IMPLEMENTAION

 

51. The source of funding for the implementation of the Support Programme for leasing of agrifood equipment shall be the State Budget of the Republic of Armenia and other funds not prohibited by the legislation of the Republic of Armenia.

(point 51 amended by No 95-L of 27 January 2022)

52. Under the Programme, the subsidised amount of leasing interest rates for 2018 shall be about 119.4 million drams which is envisaged to be financed from the State Budget of the Republic of Armenia for 2018, i.e. from the program budget "State support to the implementation of the pilot program for introduction of the insurance system in the sector of economy", and for the subsequent years ‑ at the expense of the funds allocated to the Ministry of Economy of the Republic of Armenia from the State Budget of the Government of the Republic of Armenia for the given year.

(point 52 amended by No 1157-L of 29 August 2019)

53. Within the framework of the Support Programme for leasing of agrifood equipment, in accordance with the terms of point 38 of this Programme, it will be possible to subsidise the interest rates of leasing of the acquired equipment costing about 4.3 billion Armenian drams, used in the sectors indicated in sub-point 4 of the same point and under the conditions provided for by point 40 of this Programme.

(point 53 amended by No 95-L of 27 January 2022)

54. The calculation of partial subsidisation of the interest rates of credits shall be presented in Table No 1.

(point 54 amended by No 1162-L of 2 July 2020)

 

VIII. EXPECTED OUTCOMES FROM IMPLEMENTATION OF THE PROGRAMME

 

55. As a result of implementation of the Support Programme for leasing of agrifood equipment:

(1) pre-conditions will be created to satisfy the solvent demand of economic entities of the agrifood sector by applying affordable mechanisms, and to re-equip the farms with new equipment;

(2) the level of re-equipping of farms of the agrifood sector with the latest equipment will increase to a certain extent, the beneficiary economic entities will economically strengthen, and conditions will be created for the organisation and further development of commodity production thereby;

(3) the level of competitiveness of the agrifood sector will increase, and the production and export levels of agricultural products and products obtained from their processing will grow;

(4) an opportunity will be created to replace the import of certain types of products of the agrifood sector with the local production;

(5) based on the outcomes of the first year of the Programme validity, an opportunity will be created to draw up proposals aimed at reviewing the scope of the Programme and increasing the efficiency of the process of implementation of the Programme.

(point 55 amended by No 95-L of 27 January 2022)

 

IX. TRANSITIONAL PROVISIONS

(Chapter supplemented by No 1400-L of 27 August 2021)

 

56. The actions of sub-points 8.1, 8.2 and 8.3 of point 40 of this Decision shall apply to the relations having arisen after 26 March 2020, with regard to which the transfer to lessee of the subject of lease on the basis of transfer and acceptance act of the subject of lease has not been made, or the transfer of the subject of lease on the basis of the transfer and acceptance act has been made, whereas the obligations to pay the interest amounts set by the leasing contract have not yet arisen as of the date of entry into force of this Decision.

 

Table No 1

of the Support Programme for leasing of agrifood equipment

of the Republic of Armenia

(heading amended by No 95-L of 27 January 2022)

 

CALCULATION FOR 8 YEARS OF SUBSIDisation of the interest RATE FOR AGRIFOOD EQUIPMENT ACQUIRED UNDER LEASing

 

No	Time limit	Equal repayments of the principal amount (in Armenian drams)	Leasing interest (%)	Leasing interest amount (in Armenian drams)	Percentage point of subsidisation (%)	Interest amount of subsidisation (in Armenian drams)	Interest of the amount paid by the lessee (%)	Interest amount paid by the lessee (in Armenian drams)
		3,428,800,000.00*		1,571,533,333.00		1,000,066,667.00		571,466,667.00
1.	1 July 2018-1 January 2019	110,606,452.00	11	187,570,108.00	7	119,362,796.00	4	68,207,312.00
2.	1 January 2019-1 January 2020	442,425,806.00.	11	342,695,656.00	7	218,079,054.00	4	124,616,602.00
3.	1 January 2020-1 January 2021	442,425,806.00	11	294,028,817.00	7	187,109,247.00	4	106,919,570.00
4.	1 January 2021-1 January 2022	442,425,806.00	11	245,361,978.00	7	156,139,441.00	4	89,222,538.00
5.	1 January 2022-1 January 2023	442,425,806.00.	11	196,695,140.00	7	125,169,634.00	4	71,525,505.00
6.	1 January 2023-1 January 2024	442,425,806.00	11	148,028,301.00	7	94,199,828.00	4	53,828,473.00
7.	1 January 2024-1 January 2025	442,425,806.00	11	99,361,462.00	7	63,230,022.00	4	36,131,441.00
8.	1 January 2025-1 January 2026	442,425,806.00	11	50,694,624.00	7	32,260,215.00	4	18,434,409.00
9.	1 January 2026-1 June 2026	221,212,903.00	11	7,097,247.00	7	4,516,430.00	4	2,580,817.00
		3,428,800,000.00		1,571,533,333.00		1,000,066,667.00		571,466,667.00

The principal amount of the credit shall be 3,428,800,000.00 million Armenian drams, which is the difference of the acquisition price of the subject of lease provided for by the Programme constituting 4,286,000,000.00 and the advance payment in the amount of 20%.

(table amended by No 1162-L of 2 July 2020, No 95-L of 27 January 2022)

 

Table No 2

 

Target communities of the network of slaughterhouses mapped by the Ministry of Economy of the Republic of Armenia

 

Marz	Settlements
Syunik (3 slaughterhouses in total)	Gorayk	Tsghuk	Sarnakunk	Spandaryan
	Tsav	N. Hand	Srashen	Shishkert
	Meghri
Gegharkunik (1 slaughterhouses in total)	Tsapatagh	Jil	Pambak
Ararat (2 slaughterhouses in total)	Dvin	Verin Dvin	Norashen	Verin Artashat
	Urtsadzor	Vedi	Shaghap	Lanjanist
Shirak (4 slaughterhouses in total)	Artik	Panik	Mets Mantash	Nor Kyank
	Akhuryan	Arevik	Karnut	Azatan
	Amasia	Bandivan	Aregnadem
	Ashotsk	Sizavet	Bavra
Lori (2 slaughterhouses in total)	Gyulagarak	Vardablur	Gargar	Kurtan
	Vahagni	Vahagnadzor	Yeghegnut	Dzoraget
Aragatsotn (2 slaughterhouses in total)	Tsaghkahovit	Vardablur	Sadunts	Kaniashir
	Talin	Ashnak	Katnaghbyur	Mastara

(Table supplemented by No 1162-L of 2 July 2020)

 

Form No 1

 

From: ..............……… ..............…

To: Ministry of Economy of the Republic of Armenia

(Please indicate the name of the legal person or the individual entrepreneur or the name, surname of the natural person)*

 

APPLICATION

 

On obtaining consent for subsidising the advance payment required for equipment acquired to ensure the alternative use of water resources of fish hatcheries

 

Please be informed that in the territory of .............. Community of ............ Marz of the Republic of Armenia

(please indicate the name of the organisation or the individual entrepreneur) is engaged in fish farming and would like to, under the Support Programme for leasing of agrifood equipment in the Republic of Armenia, approved by the Decision of the Government of the Republic of Armenia No 893-L of 19 July 2018, for the purpose of ensuring the alternative use of water resources, acquire appropriate equipment, and the documents certifying its cost and technical specifications are attached hereto.

I ask for your consent to subsidise the advance payment for the equipment acquired under leasing.

Enclosure: ______ pages.

 

Signatory
................................ (position)	.............................................. (name, surname)
................................ (signature)
..... ..................... — 20 SEAL

__________________________

* -The relevant data shall be filled in where the applicant is a legal person or a natural person or an individual entrepreneur.

 

(Form supplemented by No 1157-L of 29 August 2019, amended by No 95-L of 27 January 2022)

 

Form No 2

 

From: ..............… ..............…

To: Ministry of Economy of the Republic of Armenia

 (Please indicate the name of the legal person or the individual entrepreneur, or the name, surname of the natural person)*

 

REQUEST

 

on obtaining the amount of the advance payment to be subsidised, calculated for equipment acquired to ensure the alternative use of water resources by economic entities engaged in fish farming, under the Support Programme for leasing of agrifood equipment in the Republic of Armenia, approved by Decision of the Government of the Republic of Armenia No 893-L of 19 July 2018

 

No	LESSEE		Equipment acquired under leasing					Name of the financial institution providing leasing	Corresponding account of the beneficiary operating in the financial institution
	name or name, surname	address of place of business	name	quantity (pieces)	cost (million AMD)	amount of 20 percent of the advance payment (million AMD)	amount of subsidisation of the advance payment

Signatory
................................ (position)	.............................................. (name, surname)
................................ (signature)
..... ..................... — 20

_________________________

* -The relevant data shall be filled in where the applicant is a legal person or a natural person or an individual entrepreneur.

 

(Form supplemented by No 1157-L of 29 August 2019, amended by No 95-L of 27 January 2022)

 

Form No 3

 

From: ..............…

To: Ministry of Economy of the Republic of Armenia

(Please indicate the name, phone number and e-mail address of the organisation or the individual entrepreneur)

 

APPLICATION

 

on obtaining the consent for subsidising the advance payment required for leasing of mobile and/or mobile modular slaughterhouses acquired to install in target communities a network of slaughterhouses mapped by the Ministry of Economy of the Republic of Armenia

 

Please be informed that in the territory of _________________________________ Community of _________________________________ Marz of the Republic of Armenia,

_________________________________________________________________________

(please indicate the name of the organisation or the individual entrepreneur),

would like to, under the Support Programme for leasing of agrifood equipment in the Republic of Armenia, approved by Decision of the Government of the Republic of Armenia No 893-L of 19 July 2018, for the purpose of installing the network of slaughterhouses mapped by the Ministry of Economy of the Republic of Armenia in targeted ______________ Community of ______Marz of the Republic of Armenia ____________________, acquire mobile or mobile modular slaughterhouses, and the documents certifying its cost are attached hereto,.

I ask for your consent to subsidise the _________________________________________

(choose from the above the option preferable to you: in the full amount of advance payment or the portion of advance payment in the amount of AMD _______million)

 

mobile and/or mobile modular slaughterhouses acquired

 

under leasing.

 

Enclosure: ______pages.

 

Signatory

.......................... (position)

................................ (name, surname)

.......................................

(signature)

 

..... ..................... — 20

SEAL

 

(Form supplemented by No 1162-L of 2 July 2020, amended by No 95-L of 27 January 2022)

 

Form No 4

Financial Institution, FI

 

Date of submitting the request

 

Name of the institution represented.............................................

 

REQUEST No ______

 

on obtaining the amount of advance payment to be subsidised, calculated for leasing of a mobile and/or a mobile modular slaughterhouse acquired to install the network of slaughterhouses mapped by the Ministry of Economy of the Republic of Armenia in the target community, under the Support Programme for leasing of agrifood equipment in the Republic of Armenia, approved by Decision of the Government of the Republic of Armenia No 893-L of 19 July 2018.

 

No	Lessee			Mobile and/or mobile modular slaughterhouse acquired under leasing					Other notes
	name or name, surname	Marz	Community	name	quantity (pieces)	cost (million AMD)	amount of 20 percent of the advance payment (million AMD)	amount of subsidisation of the advance payment

 

Sincerely,

...............................................

(name of the beneficiary)

....................................................................................................

(authorised person — position, name, surname, signature, seal)

 

(Form supplemented by No 1162-L of 2 July 2020, amended by No 95-L of 27 January 2022)

(Annex supplemented, edited, amended by No 190-L of 7 March 2019, supplemented by No 336-L of 4 April 2019, supplemented, amended by No 1157-L of 29 August 2019, supplemented by No 1957-L of 26 December 2019, No 135-L of 6 February 2020, edited, supplemented by No 421-L of 26 March 2020, No 1162-L of 2 July 2020, supplemented by No 1234-L of 27 July 2020, supplemented, amended by No 180-L of 11 February 2021, No 1400-L of 27 August 2021, amended, edited, supplemented by No 95-L of 27 January 2022, amended by No 488-L of 15 April 2022)

 

Prime Minister of the Republic of Armenia

N. Pashinyan