For access to concessional funding from the Central Bank of Azerbaijan Republic (CBA) commercial banks will be forced to follow the new requirements of the main regulator.
Now, the actual annual interest rate on consumer loans will not exceed 29% per annum (was 30 to 40% depending on the size of assets), and micro loans - 25% (it was in the range 30-35%). The rate is fixed in a written recommendation by the CBA sent out to the banks’ Boards yesterday.
However, as Turan reported from Unibank, in the current agreements this category of loans is not subject to the recommendations of the CBA.
We recall a month ago, the Central Bank ordered to reduce the upper limit of the fee for servicing consumer loans to 1%. This instruction has been executed, but the banks in order to compensate for losses increased interest rates on loans.
Earlier, speaking on state television, the head of CBA Elman Rustamov said that by year's end interest rates on loans will be reduced gradually. According to experts, 29% APR on consumer loans are almost twice the revenues of European credit institutions. Local banks thus due to the population compensate the loss of non-refundable and extended multi-million dollar commercial loans issued by "the request from above."
In Azerbaijan, 43 banks operate after the closure of two credit institutions.--17D-
Economics
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Azerbaijan's financial standing continues to strengthen as the country's foreign currency reserves have surged to $71 billion as of January 1, 2025, according to the Ministry of Finance. This figure, which includes reserves held by the State Oil Fund of Azerbaijan (SOFAZ) and the Central Bank of Azerbaijan (CBA), far exceeds the nation's external debt, which stands at a fraction of its reserves, specifically nearly 14 times less. This robust reserve position reflects Azerbaijan's fiscal stability and the government’s strategic economic management.
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According to operational data from the Ministry of Energy of Azerbaijan, in January 2025, the country produced 2.3 million tons of oil, including condensate, and 3.9 billion cubic meters of gas.
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The State Oil Company of Azerbaijan (SOCAR) has opened a representative office in Albania and is set to launch a specific project this year, the Albanian company "Albgaz" announced.
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"Azerbaijan is currently among 54 middle-income countries," said Shahmar Movsumov, head of the Economic Affairs and Innovative Development Policy Department of the Presidential Administration, during the presentation of the World Bank’s World Development Report 2024 in Baku on February 10.
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