Debts of Not All Legal Entities to Be Under State Guarantee

According to the new rules, not all loans and debts of legal entities owned by the state will have a state guarantee.

In the rules newly approved by President Ilham Aliyev on external and domestic debts of legal entities owned by the state it is pointed out that with the exception of insurance companies, banks, non-bank credit organizations, where 51% of the shares or equity is owned by the state, the process of taking out a loan or a debt by other legal entities belonging to the state is governed by the presidential decree of 13 February 2006 "On the rules of credit agreements under the state guarantees".

According to the rules, legal entities belonging to the state have to report to the Ministry of Finance on their plans on loan agreements for the next year before June 1 every year. The Ministry should analyze the report in 30 days.

It is necessary to take into account the ratio of the total amount of the planned loan in relation to the macroeconomic indicators and indicators of debt sustainability forecast for the following year, including the ratio to GDP, the ratio of debt service to budget costs, to prepare proposals on maximum loan taking into account the exchange rate, and to provide the Cabinet of Ministers investment projects agreed with the Ministry of Economy.

The Cabinet of Ministers, agreeing with the country's President, shall determine the maximum loan for legal entities belonging to the state in the national currency before September 15.

The Ministry of Finance every year until January 30 should provide the Cabinet of Ministers information on compliance with the maximum level of obtaining loans by legal entities belonging to the state. 71D