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Central Bank of Azerbaijan introduces game-changing tool to support real sector growth

Azerbaijan Materials 23 July 2025 13:49 (UTC +04:00)
Central Bank of Azerbaijan introduces game-changing tool to support real sector growth

BAKU, Azerbaijan, July 23. The Central Bank of Azerbaijan (CBA) continues its strategic initiatives to expand access to financial resources for the country's real sector on favorable terms, Trend reports via CBA.

Central Bank noted that under the new program, funds attracted by banks and non-bank credit organizations (NBCOs) from non-resident financial institutions will be hedged with a financial instrument provided by the Central Bank.

Moreover, it was noted that under the program, funds raised by banks and NBCOs from non-resident financial institutions will be hedged by a financial instrument provided by the Central Bank after conversion into manats. Hedge funds will be used to finance micro, small, and medium-sized enterprises, family farms, and the self-employed through loans and leasing.

Furthermore, it was noted that the favorable environment created by recent reforms in the country to strengthen macroeconomic stability, enhance monetary policy transmission, and regulate the financial sector has laid the foundation for the implementation of a program that will contribute to improving access to financial services. It was noted that the strategic initiatives implemented have created the basis for international rating agencies to upgrade Azerbaijan's sovereign credit rating to investment grade, and also predict positive dynamics for the subsequent period.

"Against the backdrop of the country's sovereign rating upgrade, the strengthening of the financial stability of credit institutions also has a positive impact on their rating indicators. Thus, this favorable environment expands the opportunities for local financial institutions to attract funds from international markets. To ensure the effective use of attracted resources within the country and sustainable financing, the Central Bank deemed it necessary to support them with appropriate financial instruments and decided to introduce a new financial mechanism," the information notes.

According to the information, the program will also cover funds raised within three months before it entered into force on August 1, 2025, and used to finance the aforementioned target groups: "In this case, banks and NBCOs can take advantage of the opportunity provided by the CBA by liquidating existing active hedging instruments. In this case, 50 percent of the savings will be used to ease lending conditions for customers."

Overall, the program will help bring foreign financial resources into the country's economy by expanding the ability of credit organizations to borrow on foreign financial markets.

The use of the proposed new hedging instrument by credit institutions will also reduce the cost of resources attracted for lending. Overall, the use of this instrument creates an important basis for achieving the goals of diversifying and expanding the economy, as well as increasing financial accessibility.

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