Central Bank held a meeting with entrepreneurs

The Central Bank held a meeting with representatives of the Azerbaijan Entrepreneurs Confederation, the Association of Banks of Azerbaijan (ABA), and entrepreneurs.

The purpose of the meeting is to broaden and deepen the relationship between the real sector and the financial system as two key pillars of the national economy through active dialogue with entrepreneurs and the financial and banking sector. It also aims to improve the quality of these relationships with the most advanced economic and management and to identify problems and solutions that exist in this area.

Chairman of the Central Bank Elman Rustamov addressed the tasks set by President Ilham Aliyev to the institutions of economic regulation and financial sector of the country’s macroeconomic situation and socio-economic development. He mentioned that significant efforts were made in the country to improve macroeconomic and financial stability, and large-scale reforms are currently underway. In general, for the third year, the country has formed macroeconomic stability. The formation of inflation in the target corridor has given rise to economic conditions and significant support to economic activity. The exchange rate of our national currency has been the main driver of macroeconomic stability in the country. Consider macroeconomic stability, the monetary conditions were softened last year in terms of both monetary value reduction and money supply growth.

Rustamov was speaking about financial stability and said that while there are still some sensitivities in the financial sector in the country, financial stability is still maintained and credit recovery continues. The work to enhance the role of financial institutions in resource provision of economic activity in the real sector, to improve access of financial entities to services at all levels is intensified.

Then the leaders of the ASK, ABA, Small and Medium Business Development Agency (KOBIA), commercial banks, said that such activities are important for entrepreneurs and the financial and banking sector. It contributes to the development of the manufacturing and service sectors as a whole, and to accelerate economic growth, especially in the non-oil sector, by facilitating access to banking services.

In the meeting also the prospects of cooperation between entrepreneurs and financial institutions, currency regulation, securities, and stock markets, development of financial and microfinance institutions, cashless settlements, restructuring problem loans. were discussed There were extensive discussions on topical issues for entrepreneurs and banks. It also emphasized the importance of taking incentive measures in the country to attract healthy participants to the capital markets. In general, it is noted the importance of further intensification of financial education in the society for successful cooperation of the financial and banking sector with the real sector.

Summing up the results of the discussions, Rustamov mentioned the meeting was very useful.

“The issues raised here and the proposed proposals will be thoroughly studied and joint efforts will be undertaken. Operational measures will be taken to address tactical issues, and relevant proposals will be made to the Cabinet of Ministers on strategic issues and solutions that require government decisions. At the same time, it was noted that such meetings would be institutionalized and held regularly. ”

According to the development strategy put forward by the head of state, the transition to a new model of economic development in the country this year and forthcoming period is an important strategic horizon in terms of maintaining macroeconomic and financial stability and increasing the role of the financial and banking system in the development of the real sector. The new generation of reforms under the leadership of President Ilham Aliyev will increase the ability of all sections of society to benefit from economic development and a strong and sustainable financial system.

President of the Azerbaijan Entrepreneurs Confederation Mammad Musayev said that the comprehensive reforms led by Mr. Ilham Aliyev not only provided the country with the image of “the most reforming country in the world” but also balanced economic development.

Azerbaijani entrepreneurs highly appreciate the sensitive attitude of the leadership of the country, especially the First Vice President of Azerbaijan, to the pressing problems of entrepreneurship, which is the locomotive of our economy.

As it is known, after Azerbaijan gained independence many years in Azerbaijan not only the financial market but also its structure; commercial and investment banks, stock exchanges, insurance companies, and others.

The transition from a strictly centralized planned economy to a market economy in Azerbaijan required the restructuring of the country’s financial market as well as the financial system as a whole.

Successful economic policy has resulted in the formation and improvement of the financial system, which has not affected the development of the financial market. A financial market is a form of market where financial resources such as commodities are represented. In other words, the financial market is a market that distributes cash among economic entities. Its main purpose is to ensure efficient mobilization of funds and their transfer to those in need of financial resources. One of the key factors in the emergence of the financial market is the uneven distribution of financial resources.

In general, the financial sector is the blood vessels of the economy, and its development enables the recovery and growth of direct economic sectors. In this regard, I would like to briefly highlight some of the issues that concern entrepreneurs, as our colleagues will focus on these issues in more detail.

At the end of last year, the Azerbaijan Entrepreneurs Confederation surveyed entrepreneurs. According to the survey, a large number of entrepreneurs said that they have certain proposals for easing existing credit interest rates and conditions when it comes to the question of whether financial products meet the needs of SMEs.

The main difficulty in obtaining loans to entrepreneurs in the regions is related to the collateral system. The recognition of homes and land as collateral for real estate is not fully realized. Businesses do not have access to a movable property collateral system.

This shows that the ratio of private-sector loans to GDP in Azerbaijan is much lower than in Europe and neighboring countries. According to the World Bank report, this indicator in neighboring Georgia is only 6.8%, while in Russia it is 75.9%, and in Azerbaijan, it is only 20.8%.

One of the particular concerns of entrepreneurs in Azerbaijan is the currency regulation regime.

According to the current Rules, goods purchased in exchange for advance payments abroad must be imported to the Republic of Azerbaijan within 270 days.

Entities are fined a high amount during the same period if goods are not imported, services are not provided or their prepaid funds are not returned.

For several objective reasons, the import operations will be discussed by foreign equipment manufacturers, their ordering, the large and complex technological process of preparing the ordered equipment, technical changes in the preparation process, and financial issues.

There were also material problems, delays in the subsequent payments, untimely fulfillment of contractual obligations by foreign manufacturers, or non-compliance of the timeframe established by the legislation with the timing of equipment manufactured in the contract.

Equipment is also assembled here in the form of parts, and it also imposes penalties on businesses, citing differences in the documentation.

We propose that the current regulation be restored to its original form for 360 days and that special mechanisms, such as bargaining dates, should be applied during the import of some sophisticated equipment.

We are confident that the assortment of financial services, the development of the stock market and the securities market, the launch of investment funds will contribute to the development of entrepreneurship in Azerbaijan and we will do our best for this.

For sure, there is a need to deepen the skills and financial literacy of entrepreneurs in this area and the Azerbaijan Entrepreneurs Confederation is ready to cooperate effectively with the Central Bank.