The Central Bank governor, Martin Galstian, told reporters on Tuesday that the deferments benefited about 550,000 individual borrowers and 17,000 firms. As a result, the commercial banks temporarily lost an estimated 100 billion drams in revenue, he said, according to the Armenpress news agency.
The banks began deferring loan repayments in March as the Armenian government imposed strict restrictions on people’s movements and ordered the closure of most firms to tackle the spread of the coronavirus. The lockdown plunged the Armenian economy into recession, leaving many people without jobs and income.
The government lifted the ban on virtually all types of business activity by the beginning of May. Most banks resumed loan repayments at around the same time.
The government and the Central Bank have since faced opposition calls for imposing a prolonged freeze on all loan repayments. Prime Minister Nikol Pashinian and other government officials have opposed this, saying that the banks should deal with defaulting clients on a case-by-case basis.
Galstian also argued against such a freeze still advocated by some opposition figures, saying that additional financial losses could deal a serious blow to the Armenian banking sector.
“Can banks constantly and continuously make expenditures without expecting any revenue in return? In our view, that would be a bit reckless,” he said.
Galstian also pointed out that since March the banks have extended a total of 80 billion drams ($165 million) in loans subsidized by the government as part of its efforts to mitigate grave socioeconomic consequences of the coronavirus pandemic.
The government’s stimulus package, worth about 150 billion drams, has also included cash handouts to various categories of the vulnerable population as well as grants to some struggling businesses and farmers.