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The Ministry of Finance to give government bonds to the IBA creditors in foreign currency - UPDATED

12 May 2017 02:31 (UTC +04:00)

As part of the implementation of the necessary measures envisaged by the decree “On the measures for rehabilitation related to the preparations for privatizing the state-owned shares of the International Bank of Azerbaijan OJSC” signed by the President of Azerbaijan Ilham Aliyev, on July 15, 2015, owned by the state, the next stage of complex measures to reduce the level of debt by the ratio to the total capital by including a certain portion of the external debt of the IBA to the sovereign obligations of the country, APA-Economics reports quoting the press service of the Ministry of Finance

At this stage it is envisaged to include part of the IBA currency obligations to the sovereign obligations of the Republic of Azerbaijan, which is the largest bank that plays a significant role in the implementation of settlements and social payments, providing broad-spectrum banking services.

The Ministry of Finance reports that in order to improve the IBA, including maintaining the level of capitalization and liquidity, the government has implemented a number of measures, and some measures are still being implemented. Including, by the government department, the toxic assets of the bank were acquired by paying off the book value, additional capital was invested in the authorized capital of the bank, and depositors were given state guarantees on their deposits. Along with this, the presence of a large amount of currency liabilities of the bank, the decline in the rate of manat to major foreign currencies in 2016 led to an increase in the bank's damage and adversely affected the bank's capital position.

In connection with this, a restructuring program was developed to transfer the foreign currency liabilities of the bank to foreign creditors to the Ministry of Finance.

The proposed restructuring program will significantly reduce the level of the bank's debt, will be an additional incentive for health measures, and will make a positive contribution to ensuring reliability, long-term financial sustainability and simplification of privatization in the future.

The Ministry of Finance says that the steps taken to restructure, replace the obligations of the IBA with state obligations (for this purpose, issuance of government bonds denominated in foreign currency is provided to creditors), the government's approval of the restructuring plan are important steps to improve IBA, designed to increase confidence and support creditors.

This practice, applied to support the banking sector in the United States, Great Britain, Ireland and other countries, will ensure a reduction in the level of debt, improve financial health, increase rationality of operations, and become a strong financial institution supporting the country's economy.

Operations on all other IBA obligations, in particular, currency and manat deposits and bank accounts of citizens, legal entities and other non-residents of the Azerbaijan Republic will continue in the current regime. To fulfill these obligations, the bank has sufficient amount of free financial resources.

The Ministry of Finance together with “International Bank of Azerbaijan” OJSC provides the necessary support for the implementation of the above measures, periodic information will be provided to the public from time to time.