Azeri gov’t for maintenance of balance in use of foreign loan and management of public arrears

Business Materials 28 October 2005 12:33 (UTC +04:00)

As a result of rivalry among the international financial institutes the terms of credits given under the state guarantees are softened. The Cabinet of Ministers told Trend that Azerbaijan plans to continue intensive cooperation with the international financial institutes such as the KfW, JBIC, the World Bank, and the Asian Development Bank.

"We will continue implementing projects with all of them, as it is not right to refuse from such credits, which are profitable for Azerbaijan. At present the international financial institutes offer credits on such terms not every country. They do it with consideration of current rating of Azerbaijan,” Cabinet of Ministers told Trend.

A source at the Cabinet of Ministers underlined that despite the loans are very reasonable, it is necessary to approach carefully the use of the financing. "The amount of current financing should be decreased and it is necessary to show wise approach to crediting. Today any head of the administration starts talks with the international financial institute and asks for definite financing without informing anyone of that, while during the detail consideration of the project it turns out that the implementation of the project is out of our competence. However, there are projects which need foreign loans. So, it is necessary to regard the issue of foreign crediting and minimizing the number of commercial credit," the Cabinet of Ministers underlined.

The Cabinet said that the so-called commercial credits in Azerbaijan are not commercial like that. "The loan of the European Bank for Reconstruction and Development (EBRD) cannot be called as commercial like that, as they can be taken on long-term base thru minimal interests. If earlier it was profitable to work with the EBRD, today the opposite is observed in dynamic rise of Libor. In this connection it is necessary to optimize the borrowing of credits from all institutes. Coming out of this aspect the Finance Ministry pursues right policy to maintain the level of public arrears. As the funds spent really are regarded as the public arrears, for the time being we succeeded to return the majority of credits and maintain the balance,” the Cabinet of Ministers said.