Azerbaijan increases micro-credit repayment period in agricultural sector
BAKU, Azerbaijan, April 14
By Orkhan Chuvarli - Trend:
Micro-credit repayment period in the agricultural sector has been increased in Azerbaijan, Ayaz Museyibov, financial analyst at the Azerbaijani Center for Economic Reforms Analysis and Communication, told Trend.
“The Azerbaijani president’s decree on approval of the Regulation on the Agrarian Credit and Development Agency (AKIA) under the Azerbaijani Ministry of Agriculture dated July 23, 2015 (# 571) is another support mechanism aimed at protecting the agricultural system from the consequences of thecoronavirus pandemic,” the analyst added.
“The most important aspects of the new changes are the possibility of extending the maturity of microloans in the agricultural sector by one more year while the loan amount by three times,” Museyibov said. “The corresponding changes have formed a mechanism for providing credit guarantees in the agricultural sector through AKIA.”
“On the other hand, the new mechanism sets an upper limit on the interest rate that is applied to the banks when issuing the loans based on AKIA funds,” the analyst said. “AKIA provides the authorized credit organizations with the funds through microcredit or other types of soft loans at two percent per annum while for microloans under guarantee at 2.5 percent per annum.”
“The maximum limit on the annual interest rate which is applied by the authorized credit organizations towards AKIA’s loan funds must not exceed 12 percent for microloans without defining a way to ensure fulfillment of obligations, respectively, while for other soft loans - 7 percent,” Museyibov added.
“In particular, the risks of the non-working part of microloans will be partially compensated by AKIA, which will reduce banking risks and allocate more funds for this sphere,” the analyst said.
“The risks of the banking system reduced and the access to the funds of entrepreneurs working in the agricultural sector was ensured as a result of the adoption of these decrees in the current conditions, in connection with the expansion of loans which are issued in the field of agriculture,” the analyst added.
"On the other hand, the introduction of appropriate mechanisms stimulates the agricultural industry and its participants, which will contribute to ensuring the country's food security, especially during the pandemic," Museyibov said.