BAKU, Azerbaijan, July 2
By Eldar Janashvili – Trend:
The loan term will be extended for entrepreneurs in a number of spheres in the Azerbaijani agricultural sector and new equipment will be provided on credit, Trend reports referring to the Azerbaijani Economy Ministry.
The action plan on the implementation of the Azerbaijani president’s decree "On a number of measures to reduce the negative impact of the coronavirus pandemic (COVID-19) and the sharp fluctuations caused by it on the world energy markets and stock markets on the Azerbaijani economy, macroeconomic stability, employment in the country and business entities" was approved upon the order of the Azerbaijani Cabinet of Ministers dated April 4, 2020.
The ministry stressed that these measures will allow entrepreneurs working in the spheres affected by the pandemic to obtain a state-guaranteed loan on concessional terms. A great part of the interest on these loans will be subsidized by the state.
As a result of the application of the new rule, credit risks will be reduced while the access of entrepreneurs working in small and medium-sized enterprises to the preferential loans will be expanded.
The changes to the rules affect, in particular, the following aspects:
- extension of the loan term by sectors requiring long-term investments: the loan term has been extended for two more years in the spheres requiring long-term investments in agriculture (for example, tea growing, gardening, etc.); in other words, increased from three years to five years on small loans and from five years to seven years - on medium loans;
- as a new financing instrument, a mechanism will be introduced to issue preferential loans for the purchase of equipment. In accordance with this mechanism, a preferential loan will be used to purchase new equipment and only this equipment will be accepted as collateral. In this mechanism, the interest rate of an authorized credit institution will be seven percent while the interest rate of the Azerbaijan Entrepreneurship Development Fund - two percent.
The table below includes the changes in the loan term by sectors requiring long-term investments:
|
Loans |
Upon old rules |
Upon new rules |
|
Small loans |
5,000 – 50,000 manat ($2,941-$29,411) (up to three years) |
In spheres requiring long-term investments in agriculture: 5,000 – 50,000 manat ($2,941-$29,411) (up to five years) |
|
Medium loans |
50,001 – 1 million manat ($29,412-$588,235) (up to five years) |
In spheres requiring long-term investments in agriculture: 50,001 – 1 million manat ($29,412-$588,235) (up to five years) |
|
Big loans |
1,000,001 – 10 million manat ($588,235-$5.9 million) (up to 10 years) |
1,000,001 – 10 million manat ($588,235-$5.9 million) (up to 10 years) |
There was the need to adopt relevant regulatory legal acts and make changes to the existing ones in connection with the improvement of the mechanism of supporting the development of entrepreneurship, the fulfillment of the tasks arising from the relevant paragraphs of the Action Plan, an increase in the access of business entities to the funds, investments in the non-oil sector in the country's economy, as well as the expansion of financing instruments of the Entrepreneurship Development Fund.
For this purpose, the Ministry of Economy has prepared a package of proposals on making the changes in the "Procedure for issuing preferential loans through the funds of the Azerbaijan Entrepreneurship Development Fund", improving the mechanism of state support for entrepreneurship development and expanding financing instruments of state institutions, public organizations of entrepreneurs, including the Azerbaijan National Entrepreneurs (Employers) Confederation, Azerbaijan Banks Association.
The broad discussions in connection with business entities operating in certain sectors were also held through the Azerbaijani Agency for Development of Small and Medium-Sized Enterprises (SMEs).
The "Procedure for issuing preferential loans through the funds of the Azerbaijan Entrepreneurship Development Fund" was approved upon the presidential decree dated June 4, 2020, and the changes were made to the charter of the Fund.
(1 USD = 1.7 AZN on July 2)
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