Azerbaijani state to pay off portion of citizens’ problem loans

The Azerbaijani state will pay off a portion of its citizens’ debts which have increased in value due to the devaluation of the state currency, the manat, trend.az reports.

How exactly this compensation programme will work has not yet been announced.

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In November 2018, the opposition Republican Alternative party [ReAL] began collecting signatures for a proposal asking the state to pay off a portion of the problematic loans that citizens have.

Just an hour before the president signed the decree, the leadership of ReAL announced that it had collected 41,658 signatures in support of the proposal and intended to submit it to parliament for review.

Dollar-denominated loans

The problem loans arose in the country after the manat devaluated twice in 2015.

Many people had taken out loans from banks with interest payments tied to the dollar.

Due to the dollar going up by almost 2.5 times in value, people have had to pay more than twice as much in interest on their loans as the original rate.

Economist Natiq Jafarli says there are about 700,000 such loans, affecting almost seven per cent of the population.

In November last year, the ReAL party began collecting signatures for three proposals: to pay off dollar loans at the expense of the state, to make higher education completely free, and to make the position of mayor electable.

According to Azerbaijan’s Constitution, 40 thousand signatures were needed in order to present the bills to parliament.

On 25 February President Ilham Aliyev said at a meeting on economic and social issues that a special work group has been dealing with the problem loans for more than two months.

On 28 February, ReAL held a press conference at which the head of the party, Ilgar Mammadov, announced that the necessary signatures had been collected, and that the bill would soon be presented to parliament.

The presidential decree was announced an hour later.

ReAL party leader Ilgar Mammadov wrote on his Facebook page that the presidential decree matches their proposal almost exactly, but that it is less fair and effective as it only applies to individuals.