DUSHANBE, January 28, 2009, Asia-Plus — There is no necessity for decreasing rate of interest on loans provided by the government to cotton farmers through local banks last year, Deputy Finance Minister, Jamoliddin Nouraliyev, said in an interview with Asia-Plus.
As it had been reported earlier, the government last year provided 140 million somoni (equivalent to some 39 million US dollars) in loans to cotton farmers through five local banks at 12 percent annual interest.
“However, it cannot be ruled out that structure of these loans may be reviewed in the future as need arises,” Nouraliyev said.
According to him, commercial banks are to blame for setting excess rates of interest on the loans provided by the government to farming units through them. The deputy minister noted that some of banks had provided loans to cotton farmers at 18 to 24 percent annual interest. “I believe the loans would have been repaid in time if the banks had not set such high interest rates,” Nouraliyev said. Due to such high interest rates it will be difficult for farmers to repay the loans received and this case, banks themselves will remain in debt to the government, according to him.
“The Ministry of Finance (MoF) cannot use any administrative leverage to make commercial banks lower the cotton loan interest rates, but they should realize themselves that high interest rates are weighted against both cotton farmers and banks themselves,” he said.
We will recall that of 140 million somoni allocated by the government, 40 million were provided though Amonatbonk (Tajikistan’s savings bank, 50 million through Agroinvestonk, 35 million somoni through Orienbonk, 10 million through Tojik Sodirot Bonk (TSB), and 5 million somoni through TajPromBank.
As of December 1, 2008, the banks have repaid only 32 million somoni. Only TSB has completely repaid the government loan to this date, according to a MoF.
