BAKU, Azerbaijan, September 4. Azerbaijan has
an important role to play in fostering sustainable economic
development and private sector growth in the South Caucasus, a
representative of the European Investment Bank told in an exclusive
interview with Trend.
''Recent geopolitical developments are likely to provide a
significant boost to economic and political relations within the
region. Rising trade volumes and cross-border investment will
generate increased demand for funding and financial services,
supporting the growth and further development of the regional
banking sector. Moreover, deeper economic integration will create
opportunities for banks across the region to exchange experience
and adopt best practices from one another.
Azerbaijan has an important role to play in fostering
sustainable economic development and private sector growth in the
South Caucasus. The EIB’s priority is to support this development
by working with local financial institutions to expand access to
long-term finance, particularly for micro, small and medium-sized
enterprises (MSMEs), which are the backbone of the economy,'' a
representative of the EIB noted.
He stated that a good example is the EIB’s cooperation with Bank
Respublika, through which the Bank is providing €12 million in
financing to expand access to affordable long-term credit for
Azerbaijani MSMEs: This support helps businesses invest, grow and
create jobs while contributing to the country’s economic
diversification. Notably, €2 million of this €12 million EIB
financing was provided earlier this year to enable Bank Respublika
to make greater use of a new local currency risk-sharing mechanism
introduced by the Central Bank of Azerbaijan. This will help the
bank expand lending in local currency, reduce foreign exchange
risks for both the bank and its clients, and make financing more
stable and affordable for MSMEs.
According to him, Azerbaijan's banking sector has improved
substantially over the past decade: Supported by a strong capital
base, improving asset quality, enhanced liquidity buffers, and a
more diversified funding structure, the sector is considerably more
resilient than in previous years. The recent introduction of
liquidity adequacy requirements, notably the Liquidity Coverage
Ratio (LCR) and funding quality standards through the Net Stable
Funding Ratio (NSFR), will be instrumental in further strengthening
sectoral resilience, particularly given the high deposit
concentration in the system.
He noted that the continued downward trend in financial
dollarisation, together with the strong and steady growth in
household deposits, will further enhance the banking sector's
intermediation capacity and its ability to withstand systemic
risks.
"The EIB remains committed to working with Azerbaijan and its
financial partners to promote a modern, inclusive and resilient
financial system that supports sustainable long-term growth," a
representative of the bank said.
