Baku, Azerbaijan, April 20
By Azad Hasanli, Trend:
The German-Azerbaijani Fund (GAF) may resume its activities in 2018, a source in the government told Trend on April 20.
The activities of the GAF, established in 1999 for lending to small and medium-sized businesses in Azerbaijan, were suspended at the end of last year due to the fact that the parties - the Ministry of Finance and the Saving Banks Fund for International Cooperation of Germany [SBFIC, Manager of the GAF] - could not reach an agreement on a new contract.
The validity of the last contract expired in 2015. Without a new contract, the GAF could not continue its activities, so from 2016 to mid-2017, in fact, it was collecting previously issued loans, and did not issue new ones.
However, this year the parties once again sat down at the negotiating table, and there was a hope that the GAF would be able to restore its activities, the source told Trend.
"Under the new contract, the GAF began negotiations with banks to study their needs for foreign currency loans. If the Fund can find enough partners in Azerbaijan, the Ministry of Finance will agree to sign a new contract," the source said.
However, there are some difficulties, says the source.
"Today our banks have very high liquidity. The share of US dollar deposits is still high, and the rates on them are quite low. In this regard, it is more profitable for banks to attract US dollar deposits and use them for lending than to take from the GAF expensive loans, which are also in euros rather than US dollars. The demand for the euro in the country is not so great."
SBFIC has been operating since 1992, offering a variety of technical assistance to the banking sector. In Azerbaijan, the Fund, in particular, cooperated with the public and private sectors in strengthening the banking sector and microfinance, business development in rural areas and in other areas.
One of SBFIC's projects was the German-Azerbaijani Fund. Partners of GAF were AGBank, Bank of Baku, Unibank, ParaBank (now NBCO Para), Bank Respublika and DemirBank.