By Rasana Gasimova
Azerbaijan's Central Bank jointly with the Ministries of Economy and Finance will take measures to support the real sector, to issue business loans, and to reduce interest rates on these loans in 2020, according to the Cabinet of Ministers ’action plan on the implementation of the instructions drawn up by President Ilham Aliyev at a meeting on the results of 2019.
According to the plan, the Ministries of Economy and Finance have been instructed to prepare proposals to reduce the level of external debt and its restructuring, particularly, to replace expensive loans with loans that have lower interest rates by April 2020.
Until April 2020, it is also planned to prepare proposals for improving the “Rules for Storage, Placement and Management of SOFAZ (The Supervisory Board of the State Oil Fund of Azerbaijan) Currency Funds” and the investment policy of the fund. This task has been set for SOFAR, the Central Bank, as well as the Ministries of Economy and Finance.
The Central Bank was also instructed to prepare proposals to strengthen supervision in the banking sector, and particularly in the field of issuing high risk loans by July 2020.
At the meeting, Ilham Aliyev said that the banks should actively lend to the real sector. Aliyev emphasized that the banking sector is a major tool that should support the real sector of the economy.
The Chairman of the Board of the Central Bank, Elman Rustamov, noted that interest rates on business loans issued in Azerbaijan in 2018-2019 decreased by 5 percent. He added that in 2019, the loan portfolio of banks increased by 21 percent, noting that this is due to more active consumer lending.
Moreover, the president instructed the Ministry of Finance to continue reducing external debt. “We can repay a number of loans ahead of schedule. In addition, we conduct a cautious borrowing policy. As part of this policy, loans will be attracted mainly for technological projects,” the head of state added.
Note that at the end of 2019, Azerbaijan’s external debt accounted for 17.2 percent of the country’s GDP.
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