BAKU, Azerbaijan, June 8. S&P Global Ratings, an international rating agency, notes that lowering Azerbaijan's discount rate will encourage the expansion of the country's credit market, Trend reports.
After years of stagnation beginning in 2020, the agency reports that Azerbaijan's banking sector has begun to revive credit activity.
"We forecast that the gradual reduction of the discount rate will support further credit growth in 2024–2025. Against the backdrop of an increasing loan portfolio, we estimate that overdue loans could rise to around four percent over the next two years, compared to the 2.6 percent officially recorded by the Central Bank of Azerbaijan at the end of 2023,” the information says.
Furthermore, the CBA decided at its last meeting (May 1, 2024) to lower the discount rate from 7.5 percent to 7.25 percent, the upper limit of the interest rate corridor was reduced from 8.5 percent to 8.25 percent; and the lower limit was kept unchanged at 6.25 percent.
To note, the next CBA meeting on the issue of the discount rate is scheduled for June 21, 2024. In general, the Central Bank's decisions on the interest rate corridor parameters will be made public on July 31, September 18, October 30, and December 18.
Launched in 2012, S&P Global is the world's largest global resource for index-based concepts, data, and research. S&P Global Ratings provides credit ratings, research, and insights required for growth and transparency in 27 countries. Local and global perspectives are offered by S&P Global Ratings analysts.
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