State NBCO plans to participate in the new agriculture project of IFAD and IDB in Azerbaijan

Azerbaijan, Baku, July 27 / Trend A.Akhundov /

The Non-bank credit organization (NBCO) AgrarKredit plans to participate in the new project "Integrated Rural Development in Azerbaijan" funded by the Islamic Development Bank (IDB) and the International Fund for Agricultural Development (IFAD), Chairman Mammad Musayev told Trend.

"We are already involved in two IFAD projects - to support development of the agrarian sector in the northeastern and northwestern regions of the country. We intend to participate in the tender for the determination of authorized credit organizations under the third project. Our relationship with IFAD is normal - they monitored and approved our business in their evaluation", Musayev said.

The organization issues loans in four regions - Absheron, Siyazan, Khizi, Shabran, the northeast and northwest in Shamkir, Tovuz, Agstafa, and Gazakh regions.

"The northwest project budget is little more and our loan portfolio amounted to $4 million under this project. Some $2 million of this figure we have already issued and will try to issue the rest by late 2011. As part of another project, about $1 million was planned to be issued. We have already issued this amount and now we resume issuing loans from the returned funds", Musayev said.

He said the share of problem debt in the northwest project is about three percent, on the northeast project about one percent.

"We have issued loans to over 5,000 entrepreneurs through these projects. Credits returns for these projects are very good, at 97-98 percent", Musayev said.
He said the company's loan portfolio will reach about 20 million manat by late 2011. Today, the figure is over 16 million manat.

"We issue loans from our own funds, NFES loans, and under projects financed by international organizations", he added.

The Azerbaijani government has signed a loan agreement with IFAD worth $19.35 million to finance the Integrated Rural Development Project. The IDB's share in project funding will be $66.4 million.

The IDB loan consists of three parts, two parts in preferential terms: $14.89 million are available for a period of 20 years with a grace period of five years at 2.65 percent annually, $2 million - for 25 years with a grace period of seven years with banking services (a fee has not been established yet), $49.51 million according to the Istisna method for 15 years, with a grace period of three years and a rate swap +1.2 percent.
The total project cost is $103.8 million. IFAD, which approved a loan of $19.35 million, also engaged in financing the project.

The project aims to support increased agricultural productivity, enhanced incomes, and food security, to reach more than 50,000 households in the districts of Agdash, Yevlakh, Sheki and Oguz. The districts in the lowland areas in particular will benefit from improved water delivery after developments to the irrigation system.

Azerbaijan has been a member of the Islamic Development Bank since 1992, and today the bank's portfolio in the country exceeds $540 million, allocated for projects in various sectors of the economy.

With this new project, IFAD will have financed five programs and projects in Azerbaijan for a total investment of $87.0 million since 1997.

AgrarKredit's main shareholder is the Azerbaijani Finance Ministry, owning 99.9 percent of the shares. The remainder is equally distributed among the state insurance companies Azersigorta and OAO (Irrigation and Water Management). The authorized capital is 18.5 million manat.

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