Agricultural bank may be created in Azerbaijan

By AzerNews

Creation of a specialized agricultural bank in Azerbaijan is in the focus of the Central Bank of Azerbaijan (CBA). The need for establishing an agrarian bank emerged with the growing strength of the country's agriculture sector.

Great goals have been set before the Azerbaijani economy, and agriculture plays an important role in the achievement of these objectives, CBA Chairman Elman Rustamov said at a meeting of the central committee of the International Confederation of Agricultural Credit (CICA) that opened in Baku on Friday within the framework of the 43rd CICA Conference.

"Currently, mainly universal banks provide banking services to the agriculture sector in Azerbaijan. Also, the microfinance organizations are rapidly developing in the regions of Azerbaijan.

"Around the world different models are applied to increase support of the financial sector to agriculture, with different combinations of public and private presence. Currently we are studying the international experience," Rustamov said.

"We are considering all forms of the expansion of financing for agriculture -- from the expansion of banks and non-bank credit organizations in the regions to the creation of a specialized universal bank," he said.

Rustamov said 38 percent of the population is employed in agriculture and the state provides significant assistance to this sector.

Chairman of the Parliamentary Committee on Economic Policy Ziyad Samedzade, who also addressed the event, said all these efforts are aimed at increasing the productivity of the agricultural sector.

"Today, for example, in Israel, one farmer provides food to 100 people, in Russia - 10-15 people, and we need to strive for such performance indices. This acquires special importance in the context of negotiations on Azerbaijan's membership in the World Trade Organization," Samedzade said.

Deputy Agriculture Minister Bahram Aliyev said earlier that the creation of agricultural cooperative societies in Azerbaijan will primarily provide conditions for full coverage of food demand at the expense of own funds.

"The most important problem in this process is the creation of a special crediting mechanism, in particular, a special bank for agricultural financing," Aliyev said.

Earlier discussions were held on creating such a bank on the basis of Agrarcredit organization or a separate bank in Azerbaijan. The consultations were conducted with the World Bank, the IFC, EBRD and other international financial institutions, but no result has been achieved so far.

Agrarcredit's main shareholder is the Finance Ministry, which owns 99.9 percent of shares in the credit organization, while the rest is divided equally between Azersigorta state insurance company and Irrigation and Water Management.

The Baku event, which brought together over 60 people from 11 countries, discussed prospects for the development of Azerbaijan's banking sector, the development of the world's agricultural business, which suffered during the global financial crisis, rural tourism, etc. The event will close on Saturday.