Businesses in Azerbaijan will able to better hedge their currency exchange and interest-rate-related risks thanks to a new regulatory framework developed with the help of the European Bank for Reconstruction and Development (EBRD), Report informs.
The EBRD is working on similar projects in Bulgaria, Egypt, Morocco, Ukraine and Uzbekistan.
The EBRD has already presented the framework for Kazakh enterprises. The framework consists of the Netting Law and Resolution 77.
The Netting Law helps reduce risks in financial contracts between two or more parties by combining or aggregating multiple financial obligations.
Huseyin Ozhan, EBRD Head of Kazakhstan, said: "The adoption of this legal framework is a milestone for the local capital markets. In these globally turbulent times, it is more important than ever to provide businesses in Kazakhstan with cost-efficient hedging tools for the mitigation of their risks. It will also help the Bank source local currency to finance new projects in the country."
The EBRD has invested a total of 3.656 billion euros in 185 projects in Azerbaijan since 1992. The share of the private sector in the EBRD's investment portfolio in Azerbaijan is 14%.
Currently, the EBRD runs 33 active projects in Azerbaijan. The portfolio for these projects is 836 million euros.