Central Bank of Azerbaijan does not intend to reduce discount rate

Business Materials 27 September 2013 21:52 (UTC +04:00)

Azerbaijan, Baku, Sept. 27 /Trend, A. Akhundov/

The Central Bank of Azerbaijan (CBA) does not intend to lower the discount rate yet, CBA Director General Rashad Orujov told Trend on Friday.

According to him, the last time the CBA refinancing rate was lowered was in February 2013 from five to 4.75 percent.

"This is not the only tool that can be used to influence interest rates on loans in the country. There are other measures that we have begun to take. For example, the Azerbaijan Deposit Insurance Fund (ADIF) reduced the interest rate ceiling from 12 to 10 percent in August. This is a very effective tool with which banks begun to cut interest rates on deposits, which consequently affected the interest rates on loans. So the decrease in the discount rate is not expected yet," Orujov said.

In addition, since early 2013, the CBA has identified the requirement for use of the actual annual percentage rate (APR), the primary purpose of which is to specify the total expenditures, taking into account the additional costs for loans in the form of a single indicator.

"Banks adhere to this requirement. We conduct regular monitoring, covering the entire sector, both banks and various loan products. There may be flaws in certain products, but overall, the demand is observed. These are individual cases, we are fighting against them, working with the banks. There no problems with the implementation of this requirement," Orujov said.