Establishing agricultural credit guarantee fund to reduce state subsidies in Azerbaijan

Business Materials 8 October 2012 18:53 (UTC +04:00)

Azerbaijan, Baku, Oct. 8 / Trend J. Nasibova /

Establishing an agricultural credit guarantee fund will reduce the state subsidies in the sector, executive director of the Azerbaijan Micro-Finance Association (AMFA) Jala Hajiyeva told Trend today.

"After a fund is established, Azerbaijan will cut subsidies to the sector, as it will stimulate interest in the banking sector and, in particular, the microfinance sector, agricultural credit," she said. "This gives the opportunity for Azerbaijan to use its funds more effectively."

She said that the experience of other countries shows that it is impossible to use the model of the mechanism guaranteeing agricultural loans, by adopting it from another country. A model of the guarantee mechanism must be carefully designed for Azerbaijan.

AMFA has prepared a draft concept of establishing an agricultural credit guarantee fund. The preliminary work is being conducted. According to this concept, the fund operating on a national level, can guarantee up to 80 percent of the loan amount of the entrepreneur.