Azerbaijan, Baku, 26 April / Trend corr L. Abdullayeva/ Leasing Fund which is planned to be established by the Association of Leasing Companies of Azerbaijan in 2008 will enable solving of a crucial problem for further development of leasing in the region - shortage of middle-term and long-term bankroll, and will provide funds for financing of leasing companies. The Fund will increase volume of funds and number of corporative clients which will develop the market.
Leasing Fund is a segregated part of bankroll intended for targeted financing of leasing operations. The key directions of Fund's operation are as follows: financial assistance to leasing companies, informational service and methodological ensuring.
Russia's experience gained in recent years is worth attention. Over 700 leasing companies are operating in the country. Though it is not too much for such a large country, development of leasing and the work efficiency of a range of companies proves positive functioning.
The authorized capital of Azerbaijani leasing companies totals some $1mln, so they have to borrow credits. However, bank credits in Azerbaijan are not cheap (18-26%), consequently, leasing interest rate is also high (at least 19-27%). In Such conditions only those leasing companies can stand which are established at banks and have access to available financial resources.
So, it is a long period that leasing market needs financing. For instance, Azerbaijan's agriculture requires immediate introduction of leasing. And through the Leasing Fund it will be possible to renew technical parks which were privatized after re-organization of collective farms and state farms and have been almost completely worn-out. According to specialists, 30,000 tractors, 25,000 lorries, 4,000 combine harvesters, 1,500 fodder-pickers and 2,100 cotton-pickers require being renewed by 2015. Some $468mln is required for this purpose.
Currently, the Association is negotiating with International Financial Corporation, European Bank for Reconstruction and Development and Asian Development Bank on establishment of the Leasing Fund. Establishment of Leasing Fund is equal with establishment of an investment company. The Fund will finance local leasing companies through attracted funds.
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