The second phase of global crisis may cause serious problems to Azerbaijani banks with credit repayment, Azerbaijani ‘Echo’ reports. Number of commercial bank debtors will grow in Azerbaijan while construction sector stagnation continues – the source informs.

Mr. Vugar Bayramov, head of “Public Finance and State Budget” Department at ERC, said the ‘pyramid’ scheme of local banks predetermines negative developments. “Before the crisis, local banks attracted credits from abroad at reduced rates and allocated them in local market at penalty average annual rates of 24-26%,” Bayramov declared.

Commercial banks went on with the high-rate credit programs despite loan default threats in the market. According to the expert, the tension between banks and customers will grow in the second phase of the crisis. As per his estimations, bank sector still has the U.S. $1 billion foreign debt. “Though some local banks managed to draw funds from Europe, but failed to pay it off,” Bayramov pointed out.

The expert stressed the bank liquidity cannot be restored until the foreign debt is paid off. “Azerbaijan is one of few countries that have not provided financial support to local banks, that caused liquidity stagnation in the sector.”