DUSHANBE, March 16, 2009, Asia-Plus — An appeal by Agroinvestbonk to the government for postponement of loan repayments is timely and logical, Chairman of the Association of Banks of Tajikistan, Izatullo Lalbekov, said in an interview with Asia-Plus, commenting on a letter sent by Agroinvestbonk to the government in early March with solicitation to postpone debt repayments until the end of the year. E will recall that Orienbonk has supported Agroinvestbonk’s appeal.
“There is no other way,” said Lalbekov, “If the government does not support banks’ appeal, banks will fail to fund this year’s cotton campaign. Moreover, they will be forced to use their own reserves to pay off the state cotton loan that will affect their loan portfolios, loan resources and raise threat to liquidity ()cash position) of these banks.”
“Besides, the required reserve of banks that is kept at the National Bank of Tajikistan (NBT) could be used to support the [banking] system,” said the senior expert, “Probably the time has come to use the reserve to support banks. Central bank can support them only by this means. There are no other instruments.”
According to him, attraction of resources and increase in capitalizations of banks could also improve the situation in the banking systems to a certain extent. “However, it will be very difficult to do this without attraction of external resources because the domestic resources are very limited,” Lalbekov said.
In the meantime, he added that there ought not to expect any too serious shocks in the financial system. “The government is taking certain efforts — it has developed the anti-crisis program, announced 200 days of reforms, etc. I think these measures will help domestic economy, including enhancement of the banking system,” said Lalbekov, “However, this should not cause complacency.”
We will recall that Agroinvestbonk in early March asked the Tajik government to postpone a debt repayment until the end of the year or farmers and local banks will be bankrupt.
According to Radio Liberty’s Tajik Service, cotton farmers in Tajikistan say that the reduced market for their product means they are unable to repay loans to Tajik banks. There are some 56,000 cotton farmers in the Khatlon province who borrowed a total of some 550 million somoni ($142 million) from local commercial banks with an annual interest rate of 25 percent, according to RFE/RL’s Tajik Service.
Khatlon governor Ghaybullo Afzalov said all farmers should repay their debts or banks will confiscate their property. But Agroinvestbonk analyst Bahrom Sharifov told RFE/RL that Tajik legislation does not allow for the confiscation and sale of land, and the government should propose another solution.
