(MENAFN- Trend News Agency) BAKU, Azerbaijan, July 7. The development of the non-oil sector in Azerbaijan, further improvement of the business and investment environment, expansion of entrepreneurs' access to financial resources, and the development of state-entrepreneur relations are among the main priorities of the economic policy pursued under the leadership of the President of the Republic of Azerbaijan Ilham Aliyev, Trend reports.

In a groundbreaking initiative, pursuant to presidential decree No. 1691 issued on November 29, 2017, a novel mechanism was instituted to facilitate guarantees for loans procured by entrepreneurs in manats from accredited banking institutions, alongside the provision of subsidies for the interest accrued on these financial instruments.

The decree delineates the establishment and enhancement of the credit-guarantee mechanism as a paramount objective for the Mortgage and Credit Guarantee Fund (MCGF) of Azerbaijan.

Effective July 1, 2025, a total of 587.9 million manat ($345.8 million) in guarantees have been allocated for loans under advantageous conditions for entrepreneurs via authorized banking institutions, facilitated by the MCGF's backing. Notably, 38.2 million manat ($22.5 million) of this amount was disbursed between January and June of the current fiscal year.

Under this mechanism, the average term of guaranteed loans so far is 28 months. Thanks to the subsidies provided by the Fund for a portion of the interest on entrepreneurial loans, the effective interest rate paid by entrepreneurs has been 6.2 percent. The amount of loans allocated per entrepreneur has ranged from 30,000 manat ($17,650) to five million manat ($2.94 million).

The loans have been directed to areas such as the production and processing of industrial products, agriculture and the food industry, the construction sector, tourism, infrastructure development, machinery and equipment production, as well as trade and services.

The strategic framework anticipates that the initiatives capitalized through the fiscal instruments of the MCGF's underwriting and interest alleviation mechanisms will catalyze the generation of 5,700 novel employment opportunities.

Concurrently, pursuant to presidential decree No. 1832, enacted on August 24, 2022, innovative support mechanisms have been deployed to optimize financial accessibility for micro and small enterprises within the non-oil sector, alongside issuer entities. Two innovative mechanisms have been introduced: portfolio guarantees for manat-denominated loans and assurance frameworks for the commitments of bond issuers (entrepreneurs).

The Mortgage and Credit Guarantee Fund of Azerbaijan (MCGF) is a public fund established in 2017 by the amalgamation of the Azerbaijan Mortgage Fund and the Credit Guarantee Fund of the Republic of Azerbaijan. The objective is to enhance living circumstances, establish an effective financing system for house construction, attract both domestic and international investors to mortgage lending, and facilitate access to funding for SMEs. MCGF provides financial instruments, including credit guarantees and mortgage loans, for this purpose.

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