Interview of Ara Makaryan, Deputy Head of Lending Department, Head of Projects Financing Division of Armswissbank, to Banks.am

- Mr. Makaryan, the “Scaling up green finance practices in Armenia” program, implemented with the support of the Green Climate Fund, was launched in 2020. In Armenia, it is implemented by “Armswissbank” CJSC. Please, tell us more about this program.

- The “Scaling up green finance practices in Armenia” program in Armenia is funded by the Green Climate Fund and is implemented on the initiative of the Ministry of Environment. In Armenia, this program is implemented by “Armswissbank” CJSC. The Green Climate Fund is the largest climate fund in the world, directing its resources to curbing global warming and implementing adaptation programs. The main goal of the “Scaling up green finance practices in Armenia” program is to increase the experience of “Green” financing in Armenia through localization of international best practices and by raising the level of awareness.

The aim of promoting “Green” investments is to increase the capacity and the experience of the financial-banking system, to use the necessary tools and incentives. In order to achieve the presented results, through local and international competitions, reputable experts, and companies providing specialized services are involved, who carry out relevant researches and analysis, and the results are presented to beneficiaries of this program. Similar training programs by the Green Climate Fund are ongoing.

- Who are the potential beneficiaries of this program and what opportunities will it create for them?

- As I have already mentioned, the main goal of this program is to increase the experience of “Green” financing in Armenia, due to which investments in “Green” spheres will be promoted even more, and as a final expected result, global warming will be curbed to some extent and its consequences will be mitigated.

Representatives from the Ministry of Environment, the Ministry of Economy and the Central Bank of the Republic of Armenia participate in the Project Management Board at a high level. I would also like to mention that the Ministry of Environment is the National Accredited Entity of the Green Climate Fund in Armenia. Direct beneficiaries of this program are the Government of the Republic of Armenia, represented by the Ministry of Environment, the Central Bank, representatives of the financial and banking system of Armenia, as well as representatives of the private sector whose activities are related to “Green” investments. The expected positive results for the beneficiaries are the increase of experience in the field of “Green” financing and the expansion of the toolkit, availability of financial resources, compliance with the obligations assumed by the state to take measures to curb global warming in international structures and mitigate its consequences, improving the legislative framework coordinating the field, etc.

In addition to the above mentioned, as a result of the implementation of this program, programs that were previously considered not viable due to the lack of appropriate credit tools, available resources and experience will become more attractive in terms of investment.

- What have the results of this program been over the last year?

- This program was launched in May 2020 and is scheduled to be completed during the first half of 2022. Over the last year, local experts and reputable British organizations have conducted a study of the current situation in the field of “Green” financing in Armenia and presented the current leading financial institutions in the field, the existing human potential, the loans that were offered, revealed the main motives for making “Green” investments by the private sector, and more.



In the next stage, the British “Globalfields” company conducted a study of best international practices and presented the experience of leading countries, as well as the ways of localization of that experience and opportunities in Armenia. The results of conducted works are presented to the Beneficiaries of this project in the form of a report. It should be noted that within the framework of the same event, a 30-hour online course was organized for representatives of the Armenian financial-banking system, during which the Green Climate Fund, the French Agence Française de Développement, UNEP, IPC and the leaders of the sphere of a number of other authoritative structures shared their best practices with the participants.



- What events are planned within the framework of this program in the near future?

- Local and Swiss offices of one of the largest international auditing companies are currently studying the legal framework regulating this area to identify the barriers and to offer investment incentive mechanisms. In parallel, works aimed at environmental and social risk control and compilation of methodological guidelines in accordance with international requirements are carried out by a local specialized organization and the British “DDA International Consulting” company, which should be presented to the beneficiaries and used by financial institutions.

In addition to the above mentioned, it is planned to identify relevant “Green” investment programs in the private sector as well and submit them to the Green Climate Fund as components of National Programs.

The Green Climate Fund has also received proposals for several other events, and in case of their approval, the beneficiaries will be additionally informed about it.

- How important “Green” financing direction is for “Armswissbank” CJSC?

- “Green” financing is one of the strategic directions of “Armswissbank” CJSC. The bank has started financing in this sphere since the first years of its activity, and expanded the scale and directions of implemented programs year by year. Investments in energy-efficient, renewable energy sectors are particularly significant and targeted.

In recent years, funding for modern agricultural programs has also increased. Green projects, especially in the sphere of renewable energy financing, provide a sustainable, long-term loan portfolio, therefore, this direction is possible both in terms of building a stable loan portfolio, as well as in terms of environmental and social responsibility.

Over the past 12 months, approximately USD 25,000,000 in funding has been allocated to the financing of renewable and energy-efficient projects. I would like to note that by the end of the year, solar PV power plants with the total industrial capacity of about 45 MW financed by the Bank will be put into operation.

- What new programs does “Armswissbank” CJSC have for “Green” investments and what can investors expect in the near future?

- The bank has established long-term and effective cooperation with a number of international financial institutions, with which it implements loan programs aimed at the development of various sectors. Implementation of targeted programs with international organizations is very important for the bank and the scope of these programs is expanding each year.

Two new credit programs in the total amount of USD 8,000,000 are included in the contract conclusion process, which will be used for financing capital investments of SMEs with export potential as well as for the financing of renewable energy and energy efficient investments. Based on the rules of ethics, more detailed reference will be made after the signing of the contracts.

Both programs offer investors medium-term, long-term financing in AMD, as well as in USD and Euro. These programs are unique because in case of making “Green” investments within the framework of the mentioned credit programs and in case of compliance with the terms of the program, the investors receive a grant in the amount of 15% to 20% of the value of the credit investment without VAT.

In the coming month, we plan to sign several loan agreements in the total amount of about USD 12,000,000, which will be used to finance SME investments.

Besides, we are also actively working to expand cooperation with other international organizations, and I hope we will have the opportunity to share the results in the near future.