Azerbaijan, Baku, March 2 /Trend A.Hasanov/
A Guarantee Fund of agricultural credits may attract up to 250-300 million manat from credit institutions during the first phase of its activity in Azerbaijan, the head of the research group of the Association of Microfinance in Azerbaijan (AMFA) Gubad Bayramov said on Friday during a presentation of the concept of creating such a fund.
Studies revealed that Azerbaijani insurers are not interested in the insurance side of agriculture nor local banks in lending for small farmers because of the high level of risk in this area. The problem of lack of access to the actual funding is the main problem for Azerbaijani farmers, particularly those who are medium and small. In this regard, AMFA requested the establishment of a fund to guarantee agricultural credits under the President of Azerbaijan and has prepared a package of documents containing the concept of the situation and rules governing the fund.
"It will be possible to attract up to 250-300 million manat from credit institutions due to the transfer from the state budget amounting to 50 million manat during the first year of the fund's activity," Bayramov said.
Bayramov noted that funds allocated from the state budget will allow it to compensate credits, if they are up to 20 per cent where repayment is a problem. Budgetary funds during the first year of activity will be aimed at the protection and insurance of credit institutions and their involvement in agricultural lending.
According to the project rules of the fund, they are intended to compensate loans granted to farmers and small entrepreneurs who are experiencing problems on their return to the banks and credit institutions.
In subsequent years, the volume of transfers from the state budget should be at a level necessary to compensate bad loans for the previous year.