By Leman Mammadova
Ministry of Finance of Azerbaijan has talked on the implementation of commitments to solve the issue of problem loans.
The Minister Samir Sharifov has told journalists that Azerbaijan has fully developed a mechanism to solve the issue of problem loans.
He noted that the work envisaged in a presidential decree by President Ilham Aliyev is currently underway, stressing that it is expected that by the end of this month, the Finance Ministry will fully ensure the fulfillment of obligations and tasks on problem loans. “This is mainly about foreign currency loans.”
“We have already made a tranche, and, respectively, a certain amount of funds has already entered bank accounts. All works will be completed by May 28,” Sharifov added.
He stressed that the ministry primarily receives an order for payments from Financial Market Supervisory Authority of Azerbaijan (FIMSA), and then the funds are sent to bank accounts.
In his words, FIMSA also works with banks.
“The value and the number of loans is being clarified, on the basis of which the relevant work will start and the payments will be made, no problems are expected,” the minister said.
It should be noted that Azerbaijan will cooperate with South Korea in solving the issue of problem loans. Recently, the conference “Solving Problem Loans: Experience of Azerbaijan and Republic of Korea” was held in Baku. South Korea will share its experience with Azerbaijan in this direction.
Earlier, Azerbaijani President Ilham Aliyev signed a decree on additional measures in connection with solving the issue of the individuals’ problem loans. The decree envisages the payment of compensation to citizens whose loan burden increased as a result of the devaluation of the manat in February and December 2015.
The decree aimed at improving the welfare of the population is an important element of the social policy. That’s because the solution of the problem of credit loans of the population won’t only ease the financial burden, but will also restore confidence in the banking sector and free some debtors from legal proceedings.
The decree applies both to loans taken from banks and non-bank credit organizations. Credit unions are an exception.
According to the decree, opportunities are created for restructuring on concessional terms of both US dollar loans and manat loans with a delay of more than 360 days. If the amount of compensation exceeds 500 manats, these funds will be transferred to the account of the individual; if less, the payment will be made via money transfer.
In addition, banks will receive preferential loans under a state guarantee in the amount of up to 682 million manats as part of the decree. In order to prevent deterioration of the currency position of banks, they will also be provided with securities worth up to 215 million manats ($126.5 million) with an annual interest rate of 0.5 percent for the allocated loan.
The decree also covers loans in rubles and euros. Loans in euros and rubles will be converted into US dollars at the rate of the Central Bank for February 21 and December 21, 2015. Compensation will be issued in manats, regardless of the currency which the loan was taken in.
As of mid-May, Azerbaijan’s Finance Ministry allocated 430.6 million manats ($253 million) to pay compensation on problem loans to individuals. It is expected that 602,347 people will receive compensation. All payments are due to be completed in May 2019.
The payment of compensations for problem loans to individuals in Azerbaijan began on April 22. The payments are made through branches of banks and Azerpost postal operator.
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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