CBA to cut interest rates on loans

/By AzerNews/

By Gulgiz Dadashova

The interest rates on loans will be reduced in Azerbaijan in 2015.

President Ilham Aliyev gave the relevant instruction in the decree on the application of the law “On State Budget of Azerbaijan for 2015” signed December on 22.

The Central Bank of Azerbaijan has been instructed to take measures to reduce interest rates on loans of commercial banks and cut the difference between the lending and discount rate of the regulator, according to the decree.

Currently, the average interest rate on loans in Azerbaijan is 14.3 percent. About three-quarters of the loan portfolio of banks accounts for business loans, rates on which in average amount to 10.8 percent. Interest rates on consumer loans (a quarter of the portfolio) account for 18 percent.

The discount rate of the CBA is currently equal to 3.5 percent.

Earlier CBA President Elman Rustamov previously said that the interest rate is core of the macroeconomics worldwide.

“In general, this issue is closely connected with the problems of economic activity, economic growth, employment and inflation,” he said.

He went on to add that CBA consistently works to reduce interest rates in the country.

Interest rate on secured consumer loans for car purchase accounts for 14-18 percent, on mortgage loans allocated by the state line - 4.8 percent, on mortgage loans granted at the expense of own funds of banks - 10.9 percent.

Interest rates on consumer loans amount to 35 percent, however, they are completely unsecured loans.