Azerbaijan could establish ExImBank to support SMEs, EU says

Photo: European Commission

BAKU, Azerbaijan, October 21. The European Union (EU) recommends Azerbaijan to establish ExImBank targeting small and medium-sized enterprises, reads the “Trade Study Report – Trade Sector Development in Azerbaijan: Policies, Constraints and Opportunities”, issued by the EU.

According to the findings of the study, a significant proportion of both goods and services exporters suffer from the limited availability or inaccessibility of trade finance services. Yet, the report shows that financial institutions such as the European Bank for Reconstruction and Development, Islamic Development Bank, World Bank, Asian Development Bank, and Black Sea Trade and Development Bank provide trade finance instruments to Azerbaijani exporters.

“Since trade-finance resources allocated by international financial institutions are administered through commercial banks, there is a possibility that these funds may be diverted to purposes other than export financing. To this end, strengthening monitoring of the appropriate use of trade finance funds and organizing awareness-raising programs for exporters in this area would be beneficial. In the context of the transformation of KOBİA and AZPROMO, it would be beneficial to establish a financial instrument in the form of an Azerbaijan Export Credit Insurance and Factoring Fund or an ExImBank,” the report reads.

The authors of the report believe that this fund could provide export contract insurance, pre-export financing, and factoring services at low interest rates to SMEs exporting non-oil products and services.