TODAY.AZ / Business

IMF ,WB postpone assessment of Azerbaijan's financial sector

22 November 2012 [09:26] - TODAY.AZ
The International Monetary Fund (IMF) considers a fivefold increase in the requirements to a minimum capital of banks in Azerbaijan as a positive step if it is combined with the new regulations on non-performing loans and reserves for covering losses on loans, head of the IMF completed mission on Azerbaijan Raja Al Marzugi, who is also advisor to the IMF director on Middle East and Central Asia said at a press conference in Baku on Tuesday.

"Prudential measures may help regulate credit growth rates, especially consumer lending," he said.

He added that despite still continuing preparation, the mission regrets about the current delay in conducting the joint Financial Sector Assessment (FSAP) by IMF and World Bank, as it is extremely important for the banking system. FSAP assessment will be conducted in early 2014 in coordination with the official bodies.

"State bodies explain this by big changes expected to occur in the Azerbaijani financial market in the coming year," he said.

The new requirement for capitalization of the Azerbaijani banking sector, envisaging a five-fold increase in the minimum capital requirements - to millions manat, will take effect from January 2014.

The first assessment of the IMF and the World Bank within this programme was conducted in 2003.

The laws 'On the Banks' and 'On the National Bank', which are a set of regulations, were adopted after the first assessment. All of them basically were designed to eliminate questions that arose in the first round of the FSAP assessment.

As part of the assessment of the Azerbaijani financial sector, the World Bank and IMF experts held a stress test (simulation and economic modelling of the behaviour at lower values), which revealed a high ability of the banking system to resist risks of general indicator reduction. They showed that even with deterioration by 50-70 per cent (worst case scenario), the banking system will not fall to zero capital and its assets will exceed the liabilities which is a very positive sign.


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