The FINANCIAL — According to abc.az., German bank KfW and the Azerbaijani government have completed discussion of all documents for putting into operation the Credit Guarantee Fund (CGF) within the initiative oriented to the South Caucasus banks.
The financial market sources informed Fineko/abc.az that at the moment the agreement on CGF consulting support is expected to be signed.
“It has been entirely agreed between KfW and the government, but can be signed not earlier than September after summer vacations,” the sources informed. Earlier CGF was expected to launch operating from the second half-year.
The Switzerland’s Savings Banks Fund of International Cooperation (SBFIC) has become the CGF consultant on Azerbaijani banks as well as on the rest states of the South Caucasus.
CGF activities will cover only banks that are members of the German Azerbaijan Fund (GAF) for small and medium-size business.
The Azerbaijani and German governments signed the financial co-operation agreement on CGF in Berlin on 15 February, 2007.
The CGF creation issue was initiated in 2001. KfW will allocate EUR4 million for the project (EUR3.75 million for Fund creation and EUR250,000 for payment of consulting services). The CGF should operate as settlement account in the Frankfurt-based KfW Headquarters. The CGF will let domestic banks to borrow finances from international banks on the crediting conditions of KfW itself which has rating ‘AAA+’. KfW will undertake political and other risks. When getting the KfW primary guarantees for borrowing from international banks the domestic bank can expect guarantee period of two or three years. In case of repeated guarantee, its period can be increased. The CGF has not limit for raising credit ones by the bank, but guarantee amount at primary stage will not exceed EUR500,000. When getting the KfW guarantees the domestic banks should not extend a more than EUR150,000 credit for a loan-borrower. Besides, when raising the CGF finances the banks have not the right to finance manufacture of weapons, drugs, and strong drinks.
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