16% of Loan Attracted under IFAD North Development Project in Azerbaijan

Business Materials 27 August 2008 13:21 (UTC +04:00)

Azerbaijan, Baku, 27 August / Trend corr. I.Khalilova / The State agency on agricultural loaning at the Azerbaijani Agriculture Ministry drew $750,000 out of loan facility of the North Development Project of Azerbaijan, Razim Valiyev, the general director of the State agency, said on 26 August.

The International Fund for Agriculture Development (IFAD) and the Azerbaijani Government finance the project. The bank-agents, including MuganBank, TexnikaBank and TuranBank, finance farmers.

Loan rates were determined at 15% level, which is the same as refinancing rate level of the Azerbaijani National Bank, while it was specified as 7% within the framework of the IFAD's first project.

Distinctive moment is that the bank-agents should finance 34% of the project cost and the rest 66% will be financed by the Azerbaijani Government and the IFAD. Loan facility amounts to $4.8mln in this project.

Minimum amount of the loan for one project makes up $3,000 and maximum - $25,000, which will be designated to realize in-house reclamation work. Terms of loan issuing were specified from 36 to 60 months.

According to Valiyev, non-bank credit organizations, including Agrar-kredit and Mikromaliyye, are involved in micro loaning.

The IFAD project, sanctioned under agreement inked in Baku on 27 July in 2006, covers four north-eastern regions of the country, including Khizi, Siyazan, Davachi and Absheron Regions.

The lump cost of the project comprises $25.148mln with Azerbaijan's initial part of $2.69mln. The Government refused to attract means of the OPEC Fund ($7.9mln) for co-financing, because the fund increased annual rate of Azerbaijan from 0.75% interests to 5% interests. As a result, the Government decided to finance this part through the state budget of the country.

Within the framework of this project, about $10mln will be directed to reclamation work, $6mln to establishment of water consumers' association, $4.8mln to loaning and the rest to salaries of the working group.

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