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Country Commercial Guides FY 2000: Azerbaijan Report prepared by U.S. Embassy Baku, released July 1999 Note*

CHAPTER VIII. TRADE AND PROJECT FINANCING

The Azerbaijani banking system is small, weak, and plays a minimal role in the economy, which mostly functions on cash. Although many banks offer short-term trade financing services, longer term loans and mortgages are not available.

Western businesses use either of two banks for their local business dealings - the International Bank of Azerbaijan (IBA), the healthiest state-owned bank, or the British Bank of the Middle East Baku branch. Of the four state-owned banks, only the IBA is a fully functioning commercial bank. The other three are technically bankrupt and currently going through a restructuring program and consequently unable to lend money.

The ISA is currently in the process of being privatized. The Azeri government has selected a financial consultant to assess the value of its assets in the Bank and advise them regarding all investment proposals received. It is expected that the EBRD (European Bank of Reconstruction and Development) will take 20% of the available shares in this bank.

The IBA is in the process of being privatized. The Azeri government has selected a financial consultant to assess the value of its assets in the Bank and advise them regarding all investment proposals received. It is expected that the EBRD (European Bank of Reconstruction and Development) will take 20% of the available shares in this bank.

Both the International Bank of Azerbaijan and the British Bank of Middle East have correspondent relationships with U.S. banks.

OPIC, TDA, EXIM and AID now operate in Azerbaijan. U.S. EXIM Bank has signed a limited Project Incentive Agreement with Azerbaijan, but it is not yet operational. The World Bank and EBRD are both active in financing public infrastructure projects in Azerbaijan. See Chapter XI, Appendix E for contact details.