Value of pref­er­en­tial lend­ing to busi­ness re­vealed

Azer News - - Business - By Sara Is­rafil­bay­ova

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.

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