Japan Bank for International Cooperation (JBIC) has signed a cooperation agreement for operational cooperation with the International Bank of Azerbaijan (IBA). This is the first such agreement with a financial institution in the Caucasus region.

The purpose of this CA is to cooperate with each other by sharing information on projects, business strategies and laws and regulations in Azerbaijan between JBIC and IBA, in order to expand trade between Japan and Azerbaijan and to promote investment from Japan into Azerbaijan, as well as support the country’s economic development.
In addition, JBIC decided to expand target countries for the export credit line it signed last April with the Bank TuranAlem (BTA) in Kazakhstan.
This amendment has enabled importers in CIS countries other than Kazakhstan to utilise this credit line. This arrangement, together with the conclusion of CA with IBA, envision the participation of IBA in the expanded export credit line scheme provided for BTA, and aim at effective collaboration among the three banks for financing the export of Japanese equipment.

Azerbaijan is endowed with abundant natural resources. Its economy demonstrates a high economic growth (real GDP growth rate:11.2% in 2003) driven mainly by the oil sector.  To date, JBIC has supported the construction of oil pipelines connecting the Caspian Sea with the Mediterranean and the development of offshore oil fields in the Caspian Sea in which Japanese firms are involved.

Other CIS countries have also been pushing forward with the transition to a market economy since their independence in the 1990s, and there is growing interest among Japanese firms in these countries as export and investment destinations. These arrangements will facilitate the collection of information that the IBA holds with respect to trade and investment among CIS countries, thereby promoting Japanese exports and investment in all the CIS countries.

IBA is the largest governmental financial institution in Azerbaijan, accounting for 70% of the country’s total financial assets. It engages primarily in foreign exchange operations, trade financing and deals for government-guaranteed external credit lines.

BTA is the second largest commercial bank in Kazakhstan, with its assets accounting for 20% of the country’s total financial assets. JBIC provided a credit line totalling US$30mn for BTA last April. JBIC also provided last March a credit line totalling US$30mn for Kazkommertsbank, the largest commercial bank in Kazakhstan, holding 23% of the country’s total financial assets.