Fund to Cover External Debts under State Guarantee to be Doubled in Azerbaijan
Azerbaijan, Baku, 9 November /corr. Trend I.Khalilova / "Within the 2009 Public budget the Government of Azerbaijan plans to double fund to cover external debts under State guarantee," Fazil Farajov, head of budget management service at the Finance Ministry of Azerbaijan.
"AZN 50mln more will be added to AZN 50mln which was envisaged for 2008, but was not spent. In addition, the fund will be increased due to remains envisaged for external debts this year," said.
The mechanism of management, account and spending of these funds was determined in the regulations approved by the Cabinet of Ministers of Azerbaijan on 10 April 2008.
In order to timely fulfill the financial obligations of Azerbaijan, starting from this year there will be opened manat accounts and accounts in other currencies for servicing the credits under State guarantee. The amount of payment by basic borrower to the fund will be determined by the Ministry of Finance, taking into account the rate of risk by State guarantee and it must not exceed five percent of the amount of guarantee. The payment, transferred by borrower to the fund for the assignment to State guarantee conversely does not return.
The average annual amount of finance in the fund must not be below 25% of the total amount of financial obligations on the credits and debt provided under State guarantee. Incomes to and outcomes from the fund must be indicated in separate line in income and outcome parts of Public budget.
External debts may be covered due to the fund if problems appear with the payment by basic borrowers. In this case the borrower must appeal to the Ministry of Finance 30 days prior to the payment of debt, basing the reasons for the non-fulfillment of obligations. In its turn, due to consent of the Cabinet of Ministers, the Ministry may direct the fund towards paying the debt,
For the protection from the depreciation, the funds can be transferred to management to high-rating banks. The funds will be placed in the appropriate currency accounts depending on the currency structure of obligations and in this case the liquidity and risks are considered.
Until 2008 the funds on re-payment of the international credits in Azerbaijan were provided in separate account in the Public budget. The creation of fund will make it possible to direct its finance to the necessary purposes and to transfer to management.
As of 1 October 2008 the external debts of Azerbaijan reached $2798.5mln, which makes up 6.9% of the GDP. As compared to the beginning of year, the amount of the external borrowings increased by 14.6%.
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