By Nigar Abbasova
A Credit Guarantee Fund is planned to be created in Azerbaijan in 2017 to minimize financial risks for entrepreneurs.
The establishment of the institution is envisaged in the Strategic Road Map for the manufacture of small and medium entrepreneurship-level consumer goods in the country.
The Fund is expected to specialize in issues of small and medium scale businesses. Under the document, the Fund will open additional opportunities that will ensure the credit needs of exporters.
As for the local market, the credit guaranteeing will be limited and will cover the segment of medium entrepreneurship, while in the long-term perspective it will also extend to micro businesses.
The preference is expected to be given to credits issued in the national currency. At the initial stage, the Fund will provide guarantees for profitable spheres, as machine building and agriculture.
The criteria for the selection of companies, which will get guarantee for credits includes high credit rating and use of strong management mechanism.
Credit guarantee schemes are widely used in many developed and developing economies of the world to provide guarantees on loans to borrowers by covering a share of the risk of default.
The SME Roadmap is expected to ensure the GDP growth by 1.26 billion manats until 2020. The document comprises short-term (until 2020), medium-term (until 2025) and long-term measures (post 2025) to be implemented in the sphere.
Investments worth over 700 million manats ($398.2 million) will be required to implement te measures envisaged in it, while a lion’s share of the sum is planned to be used for the creation of industrial zones and clusters.
The Strategic Road Maps approved in early December cover almost all sectors of the economy, including, development of the oil and gas industry, the manufacture and processing of agricultural products, development of heavy industry and machinery, tourism, logistics and trade, vocational education and training, financial services, communication and information technologies and utilities.
The Strategic Road Maps will require some 27 billion manats ($15.4 billion) to be implemented, while the sum will be provided through the state and private sources.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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