Azerbaijan, Baku, Sept. 28 / Trend , N.Ismayilova /
The German development bank KfW plans to provide the first guarantee to Azerbaijan's Bank of Baku through the fund for credit guarantees (CGF) in Azerbaijan no later than the first quarter of 2012, KfW manager on financial projects Herald Hugner said at a press conference in Baku.
A guarantee is expected to be provided under a credit line from the German CommerzBank.
"The bank plans to provide a guarantee by late 2011 or not later than the first quarter of 2012. The guaranteed amount may be around 4 million euros," he said.
The agreement on financing the Fund created by KfW was signed on August 14, 2006, at the Azerbaijani-German intergovernmental negotiations in Bonn. An intergovernmental agreement on a financial cooperation for establishment the GCF in Azerbaijan was signed by the country's President on June 5, 2007.
In August 2008 KfW signed a contract with Azerbaijan's Ministry of Economic Development on beginning activity if a consultant of the Savings Banks Foundation for International Cooperation (SBFIC) of Germany works as a manager.
The KfW finance manager also intends to discuss the issue of financing services of the Fund's consultant in connection with the expiration of the contract with SBFIC in Baku. Given that the Economic Development Ministry of Azerbaijan has refused to pay these costs from the Fund of Research and Specialists, funding is currently being considered to be attracted from other sources.
The GAF's main condition is that attracted funds be directed to the development of small- and medium-sized enterprises in the GAF business scheme, or banks will have to generate the same amount of portfolio allocated to this sector.
The Fund should cooperate as an accounting account at KfW headquarters. The consultant will monitor Azerbaijani banks and act as a guarantee before the KfW.
The KfW rendered Azerbaijan 4 million euro for the establishment of the credit guarantee fund.
Guarantee of the LGF can be given in an amount of up to 90 percent of the loan; the remaining 10 percent, respectively, will be at the bank's own risk.