Loans Guarantee Fund may appear in Azerbaijan in 2017

Business Materials 23 December 2016 20:53 (UTC +04:00)
The government of Azerbaijan plans to create Loans Guarantee Fund in 2017

Baku, Azerbaijan, Dec. 23

By Azad Hasanli – Trend:

The government of Azerbaijan plans to create Loans Guarantee Fund in 2017.

This is reflected in the “Strategic Road Map for the Manufacture of Small and Medium Entrepreneurship-Level Consumer Goods in Azerbaijan” published Dec. 23 in the country’s official press.

It is noted that the fund will focus on small and medium-sized business and will help reduce the financial risks of entrepreneurs.

“The fund will create additional opportunities, which will make it possible to meet the credit needs of exporters,” the authors of the Strategic Road Map said. “Guaranteeing of loans in Azerbaijan’s local market will be limited and will primarily affect medium-sized business segment, as well as cover micro business in the long term.”

While providing a guarantee, the preference will be given to loans in Azerbaijan’s national currency, according to the document. At the same time, in the beginning of its activity, the fund will start guaranteeing loans in such high-yield fields as engineering and agriculture.

“When selecting companies the loans of which will be guaranteed, the fund will be guided by strict criteria: high rating in the credit registry, existence of a quality mechanism of the company’s management and others,” the document said.

The authors of the Strategic Road Map note that there is currently a quite high level of refusals in lending to SMEs (small and medium-sized enterprises) in Azerbaijan. Thus, in 2016, banks denied to allocate loans for every fourth project on agriculture in the country.

There are various reasons for such a high refusal level, according to the document.

The authors of the Strategic Road Map note the low level of development of SMEs in Azerbaijan, a high level of risks in this area, the lack of information to assess the risks among the reasons.