Credit of mistrust.

The growth in lending to the economy, as a rule, entails an increase in the risks of loan defaults. Thus, in Russia, the volume of overdue debt in 2006 increased more than three times and amounted, according to various estimates, to 4-7% of the loan portfolio, and non-repayment of consumer loans exceeded 15%. In developed countries, the percentage of default is, of course, much lower. The United States stands apart, where default is 2%. For this country, this is a rather low figure, given the gigantic volumes of lending. Last but not least, it is explained by the fact that default on a loan in the United States is a serious criminal offense, you can get up to 20 years. As for Armenia, an interesting picture emerges. It turns out that Armenian borrowers are distinguished by almost perfect discipline, as evidenced by our survey of banks (further in this issue). The loan default rate is almost zero (!) despite the fact that the country is considered risky in terms of lending, and the country rating is not very good. On the one hand, such discipline is, of course, commendable, on the other hand, the point here is not in our national exclusivity, but rather in the extremely modest volumes of lending to the economy. According to the Fitch Ratings agency, the share of loans in GDP in Armenia is the lowest in the world – about 9% in 2006 (in Russia, for example, this figure was 31%, in Georgia – 21%, and in Latvia – 96%). It turns out that the banks of Armenia are too much (and therefore unjustifiably) reinsured, which leads to a decrease in their role in the economy. A classic example is HSBC, which has so far pursued an ultra-cautious lending policy and only in the last two years has become relatively active in this market. And one more touch. Armenian banks always explain high interest rates by the increased risks of lending in Armenia (as you know, banks include the risks of default in the interest rate on loans). It turns out that this is not entirely true. The reason for the high rates is rather the lack of credit resources, t. e. lack of full competition in the banking market. For 2007, we plan to have a share of loans in GDP at the level of 10%. This figure, with all desire, can hardly be called ambitious.