The Armenian government intends to create a specialized fund to support the development of new businesses and startups within the country. Operative Information Center-OMM, citing foreign media, reports that Martin Galstyan, Chairman of the Central Bank of Armenia, informed journalists that the proposal is currently being discussed with the World Bank.
According to Galstyan, the primary reason commercial banks remain cautious about lending to small businesses is the low level of equity capital invested by entrepreneurs. Consequently, financial institutions perceive these companies as high-risk entities and strictly require collateral for any credit facilities. The proposed fund, being developed in coordination with the Ministry of Economy and partners from the World Bank, would provide collateral guarantees to startups under specific conditions, facilitating their access to bank loans.
The initiative is currently in the discussion phase, and no final agreement regarding the attraction of financing has been reached yet. This move comes as part of broader efforts to stimulate economic growth through the SME sector. Historically, the World Bank has played a significant role in providing technical assistance and financial resources to developing economies to foster innovation and reduce barriers to private sector investment. Such funds are often designed to bridge the gap between traditional banking requirements and the flexible needs of the modern startup ecosystem.
