Exclusive interview of the chairman of the National Bank of the RT Sh. Rakhimzoda to newspaper Asia-Plus

How works the new mechanism of financing of agriculture, what are its first results? How was solved the problem of debts of cotton growing facilities and what will be results of present cotton-picking campaign?

These and other questions of “AP” were answered by the chairman of the National Bank of Tajikistan Sharif RAKHIMZODA.

- The new mechanism of financing is an ordinary order of crediting, which was applied by banks under the attitude to all other clients. We have named it the new mechanism, because earlier cotton growing facilities were financed through future companies. NBT involved money from abroad, gave these means to the future companies, and those in turn financed cotton. In the legal plan these credits have not been correctly issued, there was no partner relation, accordingly there was no interest of facilities to return credits. From year to year debts of facilities to investors collected. In the end of the last year, NBT has declared, that the sum of these debts has reached $409 million. Then we have decided to pass to the mechanism, which would provide equal interest of the parties and the equal responsibility of the parties. That is, the risk of a non-return should have been allocated to those, who took the credit and those, who gave it. Last year banks experimented in Vose area. Some facilities successfully have extinguished credits, therefore in the beginning of this year we have passed to new system of financing. The government has allocated to several banks of the country 140 million somoni for crediting of agricultural productions. Banks have received this money under 12 % annual. Banks in turn give it out farmers’ facilities depending on a degree of risk from 14 up to 22 %. The decision on allocation by banks of own means was in parallel accepted. The decision who and on what to allocate means - both governmental, and own - banks defined by themselves. But basically it is cultivation of cotton - 95 %. In April, 2009 the allocated money with interests’ banks shall return to the state. Together with banks the part of facilities are still financed by investors.

- How you estimate the new mechanism? How the new mechanism is more effective than former?

- Its still too early to make conclusions concerning the new mechanism. Credits will be returned after gathering and sale of cotton. But I can tell that process has already started. Banks have joined in this process and actively finance farmers’ facilities. Today by banks and investors it is already financed 281,5 million somoni ($81,5 million). As to an estimation of the new mechanism, that, certainly, it is much better and more effective, than former. Earlier farmers’ took as much as they have been given per hectare. There was no responsibility. Now farmer before to take the credit in the bank, will think, whether to take $800 from the bank or to enclose own money? I think, that the new system will by all means will work in the country, whether it will be successful this year or the next. These are the normal civilized attitudes. Farmer himself solves as where and how much to buy and when to pay out wages, to whom and how to sell the crop.

- Nevertheless, disturbing opinions concerning the new mechanism are now heard. Many experts predict to this fiasco already in this year...

- The mechanism cannot be ruined. All over the world the agriculture is financed by banks. Certainly, there are risks - a poor harvest, increase of the prices for the PETROLEUM PRODUCTS, fertilizers, etc., the low price in the international market, but these risks are distributed between participants. Even in the international practice not all credits come back. If in 97-98 % of cases credits come back, it is considered, that the system works successfully. Probably, there will be cases when credits will not come back or the percent of non-return will be more, than we assumed, but in any case the given mechanism is better and more effective, than former.

- Some banks complain that in the republic there is no mechanism of insurance of the bank credit. That certificate on the right of use of the land - an insufficient guarantee of that means will return.

- Banks are free in the actions. They know, who can be given the credit and who cannot be. Already now not all facilities receive bank credits. Besides, the majority of banks do not take as the mortgage the certificate on the right of use of the land. They understand that as the mortgage this document is not liquid. Therefore practically all banks receive as the mortgage movable and real estate, and we do not interfere with them in this. Some banks employ agriculturists, buy the special equipment to estimate the land, that is analyze conditions and operate on a situation.

- However bankers confirm that in default in granting the credit, local authorities accuse banks of sabotage. Does the authority have the right to force bank to give out the credit?

- Banks are the commercial organizations. Their overall objective is reception of profit. Therefore all the risks connected with this, they carry themselves. Hence, the bank itself decides whether it is favourably to grant a loan to this or that facility or not. If the bank decides that facility is unprofitable, it can give up in delivery of means, and nobody has the right to oblige the bank. Probably, in separate areas they are forced to finance agriculture, but it is connected, more likely, with misunderstanding a role and functions of the bank. There are no laws and decisions in the country, obliging banks to give out credits.

- What about repayment of former debts of cotton growing facilities?

- The government works above this question, and soon the decision will be accepted on this issue. Now for us it is important for the facilities to pay off with those, who has invested in this crop.