By Nigar Abbasova
Azerbaijan has set five strategic objectives and 16 priorities for the development of financial services by 2020.
The objectives are reflected in the Strategic Road Map for Development of Financial Services in Azerbaijan, which was published on December 14.
The country plans to spend nearly 115 million manats ($ 65.80) to implement the measures envisaged in the Road Map, while only implementation of the basic measures will allow to increase Azerbaijan’s GDP by more than 750 million manats ($ 429.18) until 2020.
“Starting from the past year, vulnerability of Azerbaijan's financial system to risks increased due to the external shocks. Amid growing risks, the lack of strategy and a business model focused on sustainable and long-term goals, as well as a simple risk management of some financial institutions, have complicated the adaptation of the financial system to the new economic situation and limited financial intermediation,” reads the document.
The strategic objectives of the Road Map include the formation of a financial system consisting of dynamic and strong financial institutions, development of financial markets, strengthening of infrastructure, improvement of regulation and supervision mechanisms, and improvement of financial literacy.
The Road Map envisages development of the insurance market, restructuring, capitalization and rehabilitation of banks, development of capital market and money market, creation of a mechanism of protection of creditors’ rights, development of a system for sharing credit information, and establishment of a new regulatory and supervisory platform to promote digital transformation of financial institutions.
Under the document, national rating agencies may appear in Azerbaijan in 2018-2019. Financial Market Supervisory Body (FMSB) will consider the issue in the short run.
The evaluation of the credit on the basis of individual rating will allow to precisely define capital and reserve requirements, which in turn will lead to the effective use of resources and increase of competitiveness and financial stability of separate financial institutions and the banking sector as a whole.
The services are currently rendered by international rating agencies due to the lack of such institutions in the country. As a result, only a limited number of large companies get access to such services.
Ratings of Azerbaijani companies are currently defined by such international agencies as Fitch Ratings, Standard & Poor’s and Moody’s Investors Service.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
Follow us on Twitter @AzerNewsAz