By Kamila Aliyeva
Azerbaijan, along with other countries of the Eastern Partnership program, has become a state which will be covered by financing in national currency.
The European Fund for Southeast Europe (EFSE) plans to start lending in Azerbaijan’s national currency in the second half of 2019, a source in the Fund told Trend.
EFSE plans to allocate a total of 61 million euros for the Eastern Partnership countries.
As many as 44 million euros of this amount was provided by the EU under the EU4Business initiative, while 12 million euros was provided by the German Federal Ministry for Economic Cooperation and Development.
The EFSE was initiated by KfW Development Bank (KfW) with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission. It aims to foster economic development and prosperity in the countries of Southeast Europe and the South Caucasus region.
As access to finance is a key success factor in developing the micro, small and medium enterprise segments, the EFSE focuses on assisting local financial sectors in strengthening their ability to ensure adequate and sustainable financing.
This is not the first time when European financial structures choose lending in national currency to Azerbaijan.
At the end of 2017, the EBRD allocated the first corporate loan in national currency. The loan was allocated to METAK, the largest producer of plastic and metal pipes in Azerbaijan. The loan amount was 8 million euros in manat equivalent.
Since Azerbaijan is currently trying to develop SMEs and entrepreneurship activity in the country by all means, loans in national currency are only welcomed.
Small and medium-sized enterprises in the EU’s Eastern Partnership region have the potential to create jobs and drive economic growth. Obstacles such as limited access to finance, burdensome legislation and difficulties entering new markets are hindering their progress.
Financing in national currency will help small and medium-sized enterprises and low-income households protect themselves from currency fluctuations and contribute to sustainable economic development in the region.
In 2018, banks of Azerbaijan issued loans worth 7.6 billion manats, of which 4.3 billion manats were directed to business lending. Overall, lending in the country grew by 11 percent, and lending to businesses showed an increase of 7.2 percent. Approximately 70 percent of loans issued accounted for loans in national currency.