Azerbaijan, Baku, Jan.31 / Trend I.Khalilova /
Activities of the Credit Guarantee Fund (CGF), established in Azerbaijan by the German bank KfW, may be suspended, the Bank's Baku Office told Trend on Tuesday.
"Though the Fund started to work from 2008, no guarantee has been yet provided. In connection with the fact that second wave of crisis is brewing in the European financial markets situation with attraction by Azerbaijani banks of loans from the European financial institutions became complicated," KfW office said.
Issue of the fund's closure will be discussed during the visit to Baku of KfW manager on financial projects in Azerbaijan Herald Hugner.
Start of the fund's activities concurred with world financial crisis, that's why because of continuing problems of foreign banks with liquidity as well as restrictions introduced by the Central Bank of Azerbaijan, local banks didn't manage to use the CGF to attract external loans.
During his last visit to Baku in September, 2011 Mr Hugner noted opportunity of granting first guarantee to Azerbaijani Bank of Baku no later than the first quarter of 2012. German CommerzBank was expected to give this guarantee worth 4 million euro. Earlier AGbank claimed to receive guarantee under the CommerzBank loan.
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 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.