Baku, Azerbaijan, Aug. 14
By Azad Hasanli – Trend:
Restoration of Azerbaijan’s financial sector should be completed as soon as possible, Naveed Hassan Naqvi, WB country manager for Azerbaijan, said in the exclusive interview with Trend.
“Low level of activity in Azerbaijan’s financial sector worries us,” he said. “No lending and no borrowing are taking place. Without banks being there to lend, without people willing to borrow, no new businesses will start, and the economy will not recover.”
He recalled that, the only financial regulator in Azerbaijan, the FIMSA (Financial Market Supervisory Authority) was created a year and a half ago.
“Its role was to be an independent overseer of the sector, to help consolidate banks and clean-up balance sheet overall,” he noted. “So there is certain concern that this process [improvement of the financial sector] is taking longer than people expected. Until the health of this entire sector is restored, both domestic and foreign investors will have doubts [whether to invest in this sector or not].
WB is very keen to help the Azerbaijani government with advice and technical assistance, he said, adding that however, the country’s government will have the final say.
“We keep emphasizing that restoring the country’s financial sector is key priority of the government,” he said.
Currently, WB is executing the second phase of the financial sector development program in Azerbaijan. The first phase of the financial sector development program was completed in June 2016. The Swiss State Secretariat for Economic Affairs (SECO) allocated a grant of $4 million for its implementation in 2012.
The SECO will allocate $3 million as part of technical assistance to the second project on modernization of financial sector in Azerbaijan.
As part of the technical assistance, SECO and WB will support Azerbaijani government in enhancing the country’s financial stability by expanding regulatory and legal framework of the financial sector, as well as by strengthening regulatory and supervisory powers of Azerbaijan’s Financial Market Supervisory Authority.
The technical assistance covers five areas: supervision over the financial market, liquidation of banks, the deposit insurance system, protection of consumer rights, and troubled loans.
As part of the technical assistance, recommendations will be prepared to change the legal and institutional framework of the Azerbaijan Deposit Insurance Fund (ADIF) in order to bring its activities in line with international standards, speed up the repayment of compensations and improve the mechanism of financing in unforeseen circumstances.