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Parliament OKs new mechanism for covering losses of Central Bank

15 May 2015 16:30 (UTC+04:00)
Parliament OKs new mechanism for covering losses of Central Bank

The Central Bank of Azerbaijan (CBA) has solved the problem with the lack of equity.

The loss, which arose by late 2014, resulting from the revaluation of assets and liabilities in foreign currency and gold on the balance of the Central Bank, will be covered by the Bank’s own capital reserves, according to amendments to the law “On the Central Bank of Azerbaijan” adopted at the plenary session of the parliament.

In case of reducing assets below the amount of its liabilities, the resulting lack of capital will be repaid in one fiscal year at the expense of securities issued by the state, according to the changes.

After the formation of reserve capital and confirmation of the annual financial report by an audit resolution, the available remainder of realized profit of the Central Bank is transferred to the state budget.

The Central Bank capital consists of its share capital and capital reserves. The authorized capital of the Central Bank set at 50 billion manats, according to the law. Capital reserves should not be less than the authorized capital of the CBA in accordance with changes to the law, and are formed by contributions from the profits on the results of the fiscal year.

Until now, the minimum level of capital reserves was set at 15 percent of the national currency cash released into circulation.

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