On 28 December 2016, the President of the Republic of Azerbaijan (the President) signed a Decree approving the Rules for Domestic and Foreign Borrowings of State-Owned Legal Entities (the Borrowing Rules).
For the purposes of the Borrowing Rules, state-owned legal entities include the following (the Borrowers):
  1. commercial legal entities in which  the state directly or indirectly owns at least 51 percent of shares (excluding banks, non-banking credit organisations, and insurance companies);
  2. non-commercial and public legal entities established by the state; and
  3. affiliated legal entities of the legal entities listed in (1) and (2) above, in which they own, directly or indirectly,  at least 51 percent of shares.
The following debt categories fall under the scope of the Borrowing Rules:
  1. debts under the respective agreements with residents and non-residents;
  2. debts pursuant to securities transactions;
  3. debts under guarantees of third-party obligations;
  4. debts under leasing agreements; and
  5. debts in the form of goods, works and services.
From now on, by 1 June every year, the Borrowers must submit their debt plans for the next calendar year to the Ministry of Finance of the Republic of Azerbaijan (the Ministry of Finance). Upon consideration of such application, the Ministry of Finance, after consulting with the Ministry of Economy, shall propose the upper limit of borrowings for the Borrowers to the Cabinet of Ministers of the Republic of Azerbaijan (the Cabinet of Ministers). The Cabinet of Ministers, in its turn, must establish the upper limit of borrowings (expressed in national currency) for the Borrowers for the next calendar year by 15 September every year.
The Borrowers must now also obtain the consent of the Ministry of Finance before any borrowing. If a proposed borrowing relates to an investment project, a prior favourable opinion of the Ministry of Economy is also required. The Ministry of Finance shall consider an application within 30 calendar days, and its consent may only be valid until the end of the respective calendar year.
Upon conclusion of the respective debt agreement, the Borrowers must inform the Ministry of Finance (and in certain cases ‒ the Ministry of Economy) and submit quarterly and audited annual financial statements thereto.
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