President Ilham Aliyev has signed a decree on additional measures to improve the mechanisms for guarantees and interest subsidies on loans granted to business entities, as well as on amendments to a number of related decrees.
elchi reports that, according to the decree, the powers of the Mortgage and Credit Guarantee Fund regarding the provision of guarantees for loans obtained by entrepreneurs in manats and the provision of subsidies for interest accrued on such loans have been transferred to the “Business Development Fund of Azerbaijan” OJSC under the Ministry of Economy.
Until the date the decree enters into force, the Fund must ensure the full completion of the exercise of rights and fulfillment of obligations regarding guarantees provided for loans obtained by entrepreneurs in manats and interest subsidies accrued on such loans, in accordance with existing normative legal acts.
The guarantee and interest subsidy mechanisms provided for in the decree are applied at the initial stage as a pilot project until December 31, 2030, in all territories of the country except for the city of Baku and the Absheron district.
Within the framework of the guarantee and interest subsidy mechanisms, the upper limit of the annual interest rate on loans provided by authorized organizations to business entities is 13%, and 50% of the annual interest rate calculated on the provided loans is subsidized from the state budget.
Until the operation of the “Electronic Credit and Guarantee” information system covers other territories of the country, excluding the city of Baku and the Absheron district, the application of the guarantee and interest subsidy mechanisms is carried out both electronically and through the receipt and processing of paper documents.
The Cabinet of Ministers must prepare and submit to the head of state proposals regarding the following:
– Within 6 months, on the improvement of the mechanisms for providing guarantees for loans obtained by entrepreneurs in manats and subsidies for interest accrued on such loans, taking into account the experience of applying these mechanisms, including the results of the implementation of the “Rules for providing state guarantees for loans granted to business entities operating in the liberated territories and subsidizing loan interest,” approved by the President’s decree dated January 9, 2023;
– Within 3 months, regarding the improvement of normative legal acts;
The government must determine the total amount of the loan portfolio to be applied to business entities operating in territories other than the liberated ones, as well as the upper limit of the amount to be covered by state guarantees for that portfolio, and inform the head of state within 1 month. It must also take necessary measures within 1 month to ensure the Fund is provided with the required financial resources to finance the mechanisms for guarantees and interest subsidies on loans obtained by entrepreneurs in manats, exercise control over the implementation status of the obligations provided for in the decree, inform the President upon their completion, and resolve other issues arising from the decree.
The Ministry of Finance must take necessary measures to resolve relevant issues arising from the decree. The Ministry of Economy, taking into account the “Azerbaijan 2030: National Priorities for Socio-Economic Development” approved by the President’s order dated February 2, 2021, must determine the priority areas where the mechanisms provided for in the decree will be applied within one month, and take necessary measures within three months to improve the “Electronic Credit and Guarantee” information system, including ensuring the full application of the guarantee and interest subsidy mechanisms provided for in the decree through that system.