BAKU, Azerbaijan, September 17. Azerbaijan's Rabitabank and the International Islamic Trade and Finance Corporation (ITFC) signed a letter of credit contract for $10 million, Trend reports.
According to the bank, this historic agreement will play an important role in promoting trade finance in the private sector on the principle of Islamic finance. This kind of agreement has been concluded in Azerbaijan for the first time.
The International Islamic Trade Finance Corporation (ITFC) is considering opportunities to expand Islamic finance deals in Azerbaijan.
"Talking about the prospects of introducing Islamic financial tools, we see a positive beginning in cooperation with Rabita Bank, for example, and we believe that it will actively explore and introduce Islamic financial products. In our opinion, the transformation of existing banks or the creation of specialized units for Islamic banking is inevitable, as the mechanism of this financial system is feasible and meets the needs of the region. These steps can have a positive effect on the economic development of Azerbaijan and neighboring regions," said CEO of the ITFC, Hani Salem Sonbol.
In addition, ITFC shows interest in more active participation in financing important projects in Azerbaijan, which is in line with the organization's development plans until 2030.
ITFC sees potential in deepening cooperation with Azerbaijan.
The flagship program of the International Islamic Trade and Finance Corporation (ITFC) "Trade Connect Central Asia+" (TCCA+) will contribute to the development of future cooperation between ITFC and Azerbaijan, Hani Salem Sonbol said.
“TCCA+ aims to connect Azerbaijan and Central Asian member countries to other Organization of Islamic Cooperation (OIC) markets. The Trade Connect Central Asia+ program is designed to achieve inclusive economic growth, regional economic cooperation, and trade facilitation between the CIS OIC member countries and with the rest of the world. The flagship ITFC program is aimed at expanding and developing trade between six countries of the Central Asian region, namely Azerbaijan, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. By leveraging the latent potential in regional markets, the Trade Connect Central Asia+ aims to unlock the latent potential of $600 million of intra-trade in the targeted region, over the next five years, as well as to create opportunities for trade and investment worth billions of dollars with other regions of the OIC,” he said.
Moreover, a committee on corporate governance of banks will be established in Azerbaijan.
In addition, Azerbaijan and Israel discussed the possibilities of diversifying trade and economic relations.
The Central Bank of Azerbaijan (CBA) has discussed with the International Islamic Trade Finance Corporation the issue of attracting investments in the country's private sector and further financing of local banks.
CBA has started the process of transferring a number of business processes to commercial banks in order to optimize cash transactions, increase efficiency and effectiveness.
The CBA held the first meeting of the working group on macroeconomic stability.
The "Fitch Ratings" international rating agency has confirmed the long term foreign currency issuer default rating (IDR) at "BB+" with a positive outlook.
The data of the agency shows that the BB+ rating is supported by Azerbaijan's very strong external balance sheet, low public debt and high financial flexibility due to the sovereign fund's large assets.
The agency forecasts GDP growth of 1.8 percent in 2023, and in 2024-2025 - an average of 2.3 percent due to the growth of the oil economy.
Fitch also expects further growth in natural gas production with potential prospects for increasing exports to Europe when the relevant contracts are concluded.
In addition, Fitch Ratings expects a decrease in the inflation rate in Azerbaijan in 2023-24.
According to the forecast, the average inflation rate in Azerbaijan in 2023 is expected to reach 10.1 percent with a decrease to six percent in 2024.