German Development Bank KfW and the Finance Ministry of Azerbaijan began constructive negotiations regarding the future destiny of German-Azerbaijani Fund (GAF), Trend reports with reference to the KfW Baku Office. By the end of the year, the contract with the Manager of GAF SBFIC will come to an end, and it is impossible to extend the term of the contract due to the lack of additional finances.
The situation has been complicated further due to the intention of the Azerbaijani Government to refuse the third tranche of KfW for the support of the small and medium entrepreneurship though GAF. During the Azerbaijani-German inter-governmental
negotiations held on 14-15 August in Bonn, the Economic Development Ministry of Azerbaijan announced its refusal of the commercial part of the consolidated credit. It is considered in the government that without it KfW will scarcely agree to present the privileged part of the credit. The consolidated credit for GAF equaled в'¬20 million in aggregate, which was intended for 10 years with a payment delay of 5 years and interest rate eurolibor+2%.
According to the information provided by KfW, negotiations with the Ministry should be completed by the end of 2006 and presently alternatives to the future activities of GAF are being considered.