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Two deals with Mbank set to boost Azerbaijani SMEs, trade
The European Bank for Reconstruction and Development is today signing a $1.5
million loan agreement with Mbank aimed at providing much-needed credit to
small and medium sized enterprises (SMEs) in Azerbaijan. In addition, Mbank
will also become a participant in the EBRD's trade facilitation programme,
which assists local companies wishing to trade with companies abroad.
The loan facility will expand Mbank's medium-term lending capacity to SMEs.
Thomas Moser, head of the EBRD's Baku office, said small businesses in
Azerbaijan need finance if they are to succeed, which is why the promotion of
small businesses is a key element of the EBRD's strategy for Azerbaijan. He
described the SME sector as an essential engine for diversified and therefore
sustainable economic growth.
The new loan facility is part of an overall $20 million facility through which
the EBRD is providing credit for SME lending to banks in Azerbaijan. As a
participant in the framework, Mbank will benefit from credit training and
assistance provided by a consultant engaged by the EBRD and funded by the
European Union's Tacis programme.
Under the EBRD Trade Facilitation Programme, the EBRD will guarantee letters
of credit and certain other trade-promoting instruments issued by Mbank to
support Azerbaijani enterprises in international trade. TheEBRD's initial
limit under the programme will be $1 million.
The Trade Facilitation Programme promotes foreign trade with central and
eastern Europe and the CIS. Through the programme, the EBRD provides
guarantees to international and regional confirming banks. In so doing, it
takes the political and commercial payment risk of transactions undertaken by
issuing banks in the countries where the EBRD operates. The programme can
guarantee any genuine trade transaction associated with exports to, imports
from, and between the EBRD's countries of operations. More than 68 issuing
banks in the Bank's region of operations participate in the programme,
including two existing banks in Azerbaijan, together with about 177 confirming
banks throughout the world.
The above deals come at an important time for Mbank, which has recently merged
with Promtekhbank in what is seen as a welcome step toward the consolidation
and strengthening of Azerbaijan's banking sector, Mr Moser said.
The EBRD has a portfolio in Azerbaijan worth €330 million in sectors as
diverse as banking, property, power, water, transport, SMEs and natural
resources.
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