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German bank starts talks on third preferential loan for Azerbaijani entrepreneurship

Business Materials 25 September 2011 21:18
German development bank KfW plans to hold talks with the Azerbaijani government in connection with allocation of the third preferential loan worth 5 million euros to support small and medium-sized enterprises (SMEs), KfW Baku Office head Natig Abdullayev told Trend on Saturday.

Azerbaijan, Baku, Sept.25 / Trend, I. Khalilova /

German development bank KfW plans to hold talks with the Azerbaijani government in connection with allocation of the third preferential loan worth 5 million euros to support small and medium-sized enterprises (SMEs), KfW Baku Office head Natig Abdullayev told Trend on Saturday.

"In August, the government expressed its consent to receive this loan. During the visit of a delegation headed by the bank's manager for financial projects Herald Hugner, which begins on Sept. 25, we plan to hold discussions for the preparation of a financial agreement between the bank and Azerbaijan," Abdullayev said.

Like the previous two loans, KfW will provide the third loan also on preferential terms - 40 years with a 10-year grace period at an annual rate of 0.75 percent.

These funds as the first two loans are designed for funding SMEs through German-Azerbaijani Fund (GAF).

"Given the fact that these allocations [third loan] after 2012 will be invalid, it is planned to accelerate the negotiation process to have time to draw the credit funds," Abdullayev said.

Since 1999, the bank has provided two tranches of 8.7 million euro to GAF.
GAF's current portfolio is about 14 million euro, at the expense of which loans worth more than 6,300 were issued.

Since the beginning of its activity, German-Azerbaijan Fund financed 30,000 loans worth more than 110 million euro in total at the expense of own funds. At present, the fund's activity covers 16 regions, where 36 service points operate.

GAF partners are the Bank of Baku and Unibank, Parabank and Bank Respublika, DemirBank and AGbank, Rabita Bank and Mugan Bank and Nikoil Bank.

However, it is not excluded that the list can be expanded within the third loan.
Abdullayev said that during the visit the KfW delegation will meet with representatives of new banks seeking access to the GAF funds. "A tender will be announced, through which the Fund's new partners will be selected in accordance with its requirements," Abdullayev said.

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