KULOB, March 10, 2009, Asia-Plus — An agronomy expert with the branch of Tojik Sodirot Bonk (TSB) in Kulob, Saidyusuf Sufiyev, considers that an appeal by Agroinvestbonk to the government for postponement of debt payments for cotton farmers until the end of the year is an attempt to save the country’s banking system from an utter ruin.
According to him, cotton farmers in Khatlon’s Kulob region have repaid only 37 percent of last year’s cotton loans so far. “This allows one to make a conclusion that they will fail to pay off their debts by April 1, 2009,” the expert said.
Sufiyev noted that of three sides participating in the loan-providing process – government, banks and cotton-growing farms — only banks would come off worst.
“Under the present legislation, the government will withdraw its 110 million somoni, allocated to banks for providing cotton loans, from banks’ accounts without asking their permission,” Sufiyev said, noting that banks would not be able to set the system of loan against a pledge in motion.
“Firstly, banks have to wait for the loan payment deadline in order to formalize the process of seizing debtors’ property,” said the TSB agronomy expert, “Moreover, the country’s property pledge system is imperfect and while trying to use it, banks will just get stuck in litigations.”
Therefore, postponement of debt payments is the only reasonable move to save banks from complete ruin, Sufiyev said. “Banks should be freer in providing loans and selecting clients for loans.”
He further added that with introduction of a new mechanism of financing of the cotton sector in early 2008, banks were almost made provide loans to all comers. “Even later, banks were under constant pressure of local authorities,” said Sufiyev, “If the government does not meet the reasonable proposal of bankers, we risk losing the only more or less stable sector.”
We will recall that open joint-tock company (OJSC) Agroinvestbonk on March 4 applied to the government, asking to postpone debt repayments for cotton farmers until the end of the year. The farmers” loans are currently due by April 1, 2009. Jalil Tavakkalov of Agroinvestbonk told Asia-Plus that most farmers would not be able to pay off their debts by the fixed date.
