Value of preferential lending to business revealed

TAzerbaijan’s Deputy Economy Minister Sahib Mammadov made the remarks at the event titled “New rules for preferential lending in entrepreneurship” on October 2.

He said that these funds were provided to 36,000 entrepreneurs for implementing projects worth 4.9 billion manats ($2.88 billion).

About 1 billion manats ($588 million) were provided from the state budget and $1.2 billion manats ($705.88 million) - from the funds returned to the Fund on previously issued loans.

He went on to say that out of the total volume of allocated loans, 75 percent were directed to the regions of Azerbaijan, and 25 percent were allocated to Baku and its suburbs.

Further, the Deputy Minister noted that 72 percent of the total loans were allocated to the agricultural sector and 28 percent-various areas.

Mammadov stressed that in accordance with international corporate standards, the Fund has already formed a Supervisory Board of nine members.

Speaking of the amount of the preferential lending, the Deputy Minister underlined that it remained unchanged.

“As before, small loans in the amount of 5,000-50,000 manats ($2,900-$29,400) will be allocated for a period of up to three years, average loans in the amount of 50,000-1 million manats ($29,400$588,000) for a period of five years, large loans from 1 million to 10 million manats ($588,000-$5.88 million) - for a period of up to ten years and the grace period of crediting will cover half of the term used,” he stressed.

Mammadov further told reporters that the Fund plans to allocate preferential loans worth 170 million manats ($100 million) in 2018, adding that since the beginning of the year, entrepreneurs have already received preferential loans worth 113 million manats ($66.47 million).

In accordance with the procedure, the annual interest rate on the loans of the Fund is one percent, another four percent is the rate of the authorized credit institution.

The main goal of the Fund, which was established in 1992, is to provide preferential loans from the state budget for small and medium business, in order to develop entrepreneurship in Azerbaijan.

Allocation of funds is aimed at the minimizing of the impact of global economic crisis to the national economy and mitigation of its dependence on the oil sector.

This is indicated in the state program on expansion of digital payments in 2018-2020, approved by the President Ilham Aliyev on September 26.

The implementation of the program will allow increasing the share of non-cash payments by 7 percent annually. The program reads that the share of cash payments in transactions carried out in the Azerbaijan’s economy will decrease from 74 to 40 percent.

In order to speed up the application of the state program, three basic conditions and specific objectives have been identified for each of them.

The state program notes that the creation of a more favorable environment provides not only prohibiting regulations, but also the use of special incentive mechanisms.

“To make the economy transparent, it is necessary to remove institutional obstacles to the development of digital payments. For this, it is necessary to fully ensure the property rights and contractual rights of entrepreneurs, create markets leading effective and competitive activities, improve the tax system, including eliminating cases of tax evasion,” the program reads.

It also notes that for the development of financial markets it is necessary to increase the activity of the banking sector, strengthen competition in the sector, create an active money market, improve the ability to assess bank risks, and take measures to offer cheap and quality banking services to entrepreneurs and the public.

“Strengthening financial inclusion requires ensuring the availability of banking services in all regions, expanding banking products and services and improving their quality, reducing costs, and raising public awareness of digital payments,” the state program says.