ADB, Azerbaijan sign $500M loan agreement

Business Materials 22 December 2016 18:18 (UTC +04:00)
Azerbaijan’s government and the Asian Development Bank (ADB) signed an agreement on a $500-million loan

Baku, Azerbaijan, Dec. 22

By Azad Hasanli – Trend:

Azerbaijan’s government and the Asian Development Bank (ADB) signed an agreement on a $500-million loan, according to the document posted on the ADB website.

The loan, signed into an agreement on Dec. 8, was approved by the ADB on Dec. 7. It is designed to cover social maintenance, creating jobs and diversifying the economy to mitigate the adverse impact of decrease in oil prices.

The loan will be allocated in one tranche.

The interest rate on the loan is LIBOR plus 2 percent. Interest payments must be made twice a year – on February 15 and August 15. Azerbaijan will also need to pay a commission of 0.75 percent each year.

This commission will accrue on the full amount of the loan (after deduction of the repaid part of the loan) 60 days after the date of signing of the agreement.

In accordance with the terms of the agreement, Azerbaijan’s government can at any time ask the bank to change the interest rate, as well as to set restriction on floating interest rate.

The loan must be repaid in four tranches of 25 percent per each installment starting from 2020 and before August 15, 2021.

Terms of the loan provided by the ADB to Azerbaijan, aimed to support the economic growth, will differ from the terms of other borrowings, Nariman Mannapbekov, head of ADB office in Azerbaijan, earlier told Trend.

Mannapbekov said the loan will be granted as part of the Countercyclical Support Facility (CSF) and that the CSF terms could be slightly tougher than the terms of other ADB facilities.

In addition to the loan, ADB will provide technical assistance of $1.2 million to help design reforms in macro-fiscal management, state-owned enterprises and in the finance sector.

ADB, based in Manila, was established in 1966 and is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.

Azerbaijan became the ADB member on Dec. 22, 1999.