A new report commissioned by IFC, a member of the World Bank Group, has identified steps that the government of Armenia can take to stimulate the leasing industry, which would in turn support the development of small and medium enterprises.

The report, produced by the IFC Armenia Banking Market Development Project at the request of the Ministry of Economy, found that by discontinuing the use of import value added tax on goods for leasing purposes, the government would stimulate the expansion of the leasing industry. Other recommendations concern improvements to the Civil Code and further promotion of leasing with small and medium enterprises.

Currently at a low level of development in Armenia as compared to other countries in the region, leasing would largely help small and medium enterprises, which account for significant output and employment in the Armenian economy.

“Leasing can support the growth of small companies, which do not have property to secure bank loans and therefore find it difficult to access traditional bank finance,“ said Thomas Lubeck, IFC Regional Head, Caucasus. “This report identifies specific steps that the government can take to further stimulate the growth of the leasing industry.”

IFC supports the development of leasing in Armenia through a combination of targeted investments and advice. IFC was a co-founder of ACBA Leasing, Armenia’s first leasing company, investing equity and providing a long-term senior loan to the company in 2003. Earlier this year, IFC provided an additional $3 million loan to ACBA Leasing to help expand access to finance for local small and medium enterprises.