By Amina Nazarli
Azerbaijan needs to accelerate restructuring the banking sector, claims Chief of the International Monetary Fund’s (IMF) Mission in Azerbaijan.
Mohammed El Qorchi, who is on a visit in Baku told Trend that the sooner the banking sector is stabilized, the sooner the situation will be normalized in the economy as a whole.
“The restructuring has been going on for some time and the authorities, I believe, have taken it seriously, especially recently with the establishment of FMSB [Financial Market Supervisory Body],” noted El Qorchi.
He said that IMF recommendation is that it is important to bring the banking sector to a normal and more stable situation. The chief added that instability in the banking sector has implications on many things, including the confidence in the economy and in the exchange market.
Chief of the IMF mission said that despite the difficult situation in the banking sector of Azerbaijan, the country's government was able to achieve success in the issue of banks’ restructuring.
“The situation in the banking sector is challenging. As you know, the authorities have been restructuring the banking sector for some time. They were dealing with IBA [International Bank of Azerbaijan], the biggest bank, but also with other banks,” he noted.
During the past year, 11 banks were closed in the country and the government is working diligently to restructure other banks that need support or may not be viable, said El Qorchi.
“So, this time we feel that the authorities are making progress,” he said, adding that the Azerbaijani authorities have informed the IMF mission that they have a good plan and this year they will complete the banking sector’s restructuring.
“And that involves not only the IBA, but also other small banks,” added El Qorchi.
He also noted that during the visit, the IMF mission will have a meeting with officials of Azerbaijan’s leading banks, where the sides will discuss the current banking sector restructuring.
IMF chief also gave forecast for Azerbaijan's economy, noting that in the medium term it will continue to grow at two to three percent per year. In 2017, the situation in Azerbaijan will be better than in 2016, according to the chief of the IMF, adding that some difficulties in the economy will still remain.
El Qorchi expressed readiness to support the Azerbaijani state in carrying out reforms in the country. He said that Azerbaijan has not yet appealed to the IMF to provide support, but in the case of such appeal the Fund is ready to render necessary assistance to the country.
The International Monetary Fund opened its office in Baku in 1992. The Fund allocated loans worth $577.3 million to Azerbaijan for supporting the country's economic reform program during 1995-2005. Azerbaijan has fully repaid the loans.
Speaking at the meeting with IMF delegation led by El Qorchi, FIMSA Chairman Rufat Aslanli said that as a result of restructuring measures, the banking sector of Azerbaijan demonstrates a tendency towards stabilization.
Rehabilitation of the banking sector is the main priority of FMSB, he added.
Aslanli also informed El Gorchi about the phased execution plan of measures on the identification of the main risks in the insurance sector and their elimination.
In turn, El Gorchi supported measures carried out in the country in the banking and insurance spheres, and expressed confidence that these steps will contribute to the country's financial sector.
The IMF delegation also held meeting with leading banks of the country and discussed current situation in the banking sector.
Chairman of the Azerbaijan Banks Association Zakir Nuriyev said that the sides discussed decisions approved by the FMSB to stabilize the situation in the sector.
"IMF did not put forward specific proposals. We discussed the impact of ongoing reforms in the sector, as well as the banks' plans for further development," Nuriyev said.