IMF: Azerbaijan should continue clean-up of banking system (Exclusive)

Baku, Azerbaijan, Nov. 8

By Rashid Shirinov – Trend:

In Azerbaijan, Kazakhstan and Tajikistan the authorities should continue to pursue a prompt clean-up of the banking system to support growth, IMF Deputy Director for the Middle East and Central Asia Juha Kahkonen told Trend.

He noted that bad loans need to be dealt with, and some banks are in need of fresh capital.

“In Azerbaijan, the authorities should prepare for the expiration of the blanket deposit insurance guarantee, set to take place in March 2019,” the deputy director said.

He added that across the region, a new business model for banks is needed – one that involves better management, governance, risk management, and supervision.

“In Turkmenistan and Uzbekistan, there is a need to catch up to the other countries and to develop independent commercial banks and financial products,” Kahkonen said.

The deputy director also spoke about technical assistance that IMF provides to Azerbaijan and Central Asian countries.

“In Azerbaijan, IMF has provided technical assistance on the main macroeconomic policy areas. This has included advice and recommendations on monetary and exchange rate policies; fiscal policies; bank supervision; national income accounting, fiscal and monetary statistics,” he said.

In Kazakhstan, technical assistance has also focused on monetary and exchange rate policies; fiscal policies, notably in public financial management; banking issues; and statistics, according to Kahkonen.

In the other Central Asian countries, IMF’s support has been extensive and wide-ranging, particularly in Kyrgyzstan, Tajikistan, and recently, in Uzbekistan.

“The focus areas have been monetary and exchange policy, the financial sector, fiscal policy and statistics, but also in legal reforms. IMF also provides training to public officials from the region in macroeconomic policy issues,” the deputy director said.

It is noteworthy that since 1993, IMF has lent a total of $2.1 billion to Central Asia, of which $770 million were lent to Kazakhstan. During the same period, Azerbaijan received $515 million in IMF financing.

The last loan to Kazakhstan was in 1998 and to Azerbaijan 2005. Currently, IMF engages with Azerbaijan and Central Asian countries by providing advice on economic policies, and training and expertise to improve economic institutions and capacity to implement economic policies.

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Follow the author on Twitter: @ShirinovRashid

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