IFC announces about closing of technical aid project of leasing development in Azerbaijan and Central Asia

Azerbaijan, Baku, April 22 / Trend I. Khalilova /

Patrick Luternauer Senior Operations Manager Sector of the International Finance Corporation arrived in Baku to announce closing of the project of technical aid under the Leasing Finance Fund in Azerbaijan and Central Asia, IFC project said on April 22.

The corporation has delivered leasing companies of the Republic loan funds in the amount of $6 million since 2003, IFC representation in Azerbaijan head Aliya Azimova said. The State Secretariat for Economic Affairs (SECO) granted $3 million as technical aid.

"IFC does not plan to continue realization of leasing project but intends to continue financing of other priority projects in its strategy," the project said.

Research conducted by IFC in 2008 demonstrates that Azerbaijani leasing operations have great potential for further development. More reserved forecast determines volume of Azerbaijani leasing market in the amount of $500 million in the nearest future basing on official statistics on import and investments in major means.

As a result of 2008 volume of leasing portfolio hit $208 million in Azerbaijan.

If 12 companies operated in Azerbaijani leasing sector as a result of 2007, presently, their number hits 19.

Low level of capitalization in leasing sector of the country within realization of the project limited opportunities of IFC in increasing volumes of financing and loaning directly. Capital of leasing companies hits in average $1 million.

It is also difficult to finance Azerbaijani banks for leasing as they have own limits for subsidiaries loaning.

Upon IFC terms, the corporation can finance to 60 percent of joint capital (without subordinate loans that are taken into account in the capital of the second level).

Roughly $6 million was granted for Azerbaijani leasing companies from Leasing Finance Fund in Azerbaijan and Central Asia with budget in the amount of $30 million. These funds were granted in the following way - Uni Leasing ($5 million) and AG Leasing ($1 million) They were financed via these banks - UniBank and AzerigazBank accordingly.

Major activity of IFC was technical aid of Uni Leasing, AG Leasing and Bank of Baku from beginning of IFC technical aid project in Azerbaijan though consultations were rendered to other leasing companies too. 

But Uni Leasing left this program in 2008.

As term of IFC project realization expired in July 2008, it was prolonged till February 2009. Term was prolonged without attracting of additional funds for technical aid because of economy for allocated funds from the State Secretariat for Economic Affairs of Switzerland (SECO) and FMTAAS fund.

The Association of Azerbaijani Leasing Companies was established within the project.

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