Azernews.Az

The National Bank of Azerbaijan (NBA), the country`s central bank, has lowered annual interest rate on loans from 15% to 12%. The new rate went into effect on Tuesday.
Additionally, beginning November 3, mandatory hedging on bank liabilities both in the national currency, manat, and in foreign currencies, will be lowered from 12% to 9%. Further, mandatory hedging on external liabilities ranging to 5% will be eliminated. The measure will boost the liquidity of local banks, experts say.
Throughout the year, Azerbaijan`s strategic currency reserves have exceeded $17 billion, while total external assets topped liabilities by $9 billion. Thus, the country`s creditor position in the world economy has strengthened. Currently, its strategic currency reserves exceed gross foreign debt by 1.7 times and ensure its international solvency.
The NBA is also taking preventive measures, jointly with the government, to reliably ensure financial stability of the domestic banking system and to ward off outside risks. These steps seek to boost the sustainability of the banking system in the face of the global financial crisis.
Analysts say that, although local banks have recently discontinued the disbursal of loans, they are facing a shortage of funds, which has slowed down activity in the domestic credit market.
According to the central bank, the protection of Azerbaijan`s banking system against risks has been stepped up this year. Also, the management of crediting, liquidity and market risks has been taken under control.
We recall that the NBA raised interest rates earlier this year from 13% to 14% and, further, to 15%.
Economics expert Vugar Bayramov says the NBA`s latest reforms are due to the financial crisis that has hit world markets, as well as high inflation levels in Azerbaijan.
"The latest decision will primarily put an end to the policy of expensive credit rates in the country. This, in turn, will bring down interest rates on loans allocated to citizens and deposits taken from them," Bayramov said.