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Azerbaijan to Introduce New Method of Financing Agrarian Sector

Business Materials 24 September 2007 11:59 (UTC +04:00)

Azerbaijan, Baku / Trend corr. I.Khalilova / The National Bank of Azerbaijan (NBA) carried out monitoring in order to improve the existing method of financing and loans in the agrarian sector, Rufat Aslanli, the deputy chairman of NBA, said. As a result of the monitoring it was revealed due to huge risks in the agrarian sectorbanks in regions finance consumer demands and small businesses only, which has a negative affect on the development of the agrarian sector. In such cases farmers prefer to move from the agriculture to the trade sector. The NBA and the Finance Ministry have developed a set of proposals on the institutional development of agrarian financing.

"International experience shows that loans to the agrarian sector technically differ from usual loans, including micro crediting and project financing", Aslanli said.

There are notional seasons in the agrarian sector; therefore agricultural risks differ from manufacturing. The French bank Credit Agricole, Dutch Rabobank and German banks have their own special way of financing agriculture, including production, development, logistics and implementation.

"We believe if this system is introduced in Azerbaijan we can provide full financing to the agrarian sector," NBA's deputy chairman said.

Specialists from NBA visited France to familiarize with their experience and to develop the proposals. The proposals envisage the creation of a bank for solely agricultural financing in the country. Elman Rustamov, the NBA's head, said that the main goal was to turn the non-banking crediting organization Agrar-credit into a bank for privatization.

Since the beginning of 2007 the European Commission has been rendering technical assistance to 'Agrar-credit' to gain its full banking license, and to develop the privatization sector in the future. The EU agreed with Agrar-credit on privatization by the end of 2008. However, the terms to turning it into a banking organization have not been agreed.

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