Why are there high interest rates on loans in Azerbaijan?

The Central Bank of Azerbaijan's recent decision to lower the discount rate has sparked widespread inquiries regarding its potential effect on the interest rates of loans issued by local banks. This follows a history where the discount rate was largely seen as an indicative tool rather than an active instrument of monetary policy.

In 2023, Azerbaijan demonstrated a trend in both attracting foreign direct investment (FDI) and placing domestic investments abroad. According to Friday's briefing by Samir Nasirov, Director of the Statistics Department of the Central Bank of Azerbaijan (CBA), the country has seen a significant increase in foreign direct investment indicators, which highlights a prosperous economic environment attractive to international investors.

The Central Bank of Azerbaijan (CBA) is actively working to increase the role of investment companies in the country's financial sector.

In the realm of Azerbaijan's financial landscape, a longstanding issue has captured the attention of global economic watchdogs: the pronounced disparity between loan and deposit interest rates within the country's banking sector.