EIB Global, the international partnerships and development arm of the European Investment Bank, has signed an additional €2 million top-up to its existing €10 million loan to Bank Respublika in Azerbaijan. This new financing strengthens ongoing efforts to improve access to funding for micro, small and medium-sized enterprises (MSMEs) in the country and builds on the original loan agreement signed in 2024. The move reflects continued European Union support for private sector development and financial inclusion in Azerbaijan.
The additional financing will allow Bank Respublika to expand its lending to Azerbaijani businesses, with a particular focus on increasing the availability of loans in Azerbaijani manat. By providing more local currency financing, the operation is expected to help businesses access more stable and affordable funding, reducing the risks associated with borrowing in foreign currencies. This is especially important for smaller enterprises, which are often more vulnerable to exchange rate fluctuations and financing constraints.
MSMEs are seen as a vital part of Azerbaijan’s economy, playing an important role in economic diversification, job creation and entrepreneurship. Improving their access to finance is therefore considered essential for strengthening the private sector and supporting more sustainable long-term economic growth. Through this top-up, EIB Global and Bank Respublika aim to make it easier for local businesses to secure the capital they need to grow, innovate and create employment opportunities.
The timing of the operation is also significant because it coincides with Bank Respublika’s planned pilot use of a new local currency hedging mechanism introduced by the Central Bank of Azerbaijan. This new financial tool is designed to help the bank manage foreign exchange risks more effectively, creating a more stable environment for lending in local currency. By combining additional EIB financing with this hedging mechanism, the initiative supports a practical and timely expansion of manat-denominated lending while improving the bank’s ability to manage currency exposure.
The partnership highlights the growing cooperation between EIB Global and Bank Respublika, which is one of Azerbaijan’s leading financial institutions and an active supporter of MSMEs. EIB Vice-President Karl Nehammer noted that micro, small and medium-sized enterprises are at the heart of Azerbaijan’s economy and said the continued partnership is helping local businesses gain access to the funding they need to grow, create jobs and innovate. He also emphasised that financing in local currency is particularly valuable because it improves business resilience and strengthens the country’s private sector.
The European Union’s Ambassador to Azerbaijan, Marijana Kujundžić, also underlined the importance of building deeper and more resilient financial markets to support Azerbaijan’s economic transformation. She described the Central Bank’s new local currency hedging mechanism as an important innovation that can help banks better manage exchange rate risks and expand lending in national currency. According to her, partnerships like this between the EIB and local institutions contribute to a stronger environment for private sector growth.
Bank Respublika Chairman Tariyel Ismayilov welcomed the continued support, describing EIB Global as one of the bank’s key international partners in Azerbaijan. He also praised the Central Bank’s proactive approach in introducing the currency risk hedging mechanism, saying it opens new opportunities for international financing while strengthening lending to businesses in the national currency.
Overall, the €2 million top-up represents more than just an extension of an existing loan. It is a targeted effort to deepen access to local currency finance for Azerbaijani MSMEs, reduce exchange rate risks, and support broader economic resilience. By linking fresh financing with new market tools introduced by the Central Bank, the initiative aims to create a stronger and more sustainable lending environment for small businesses that are critical to Azerbaijan’s economic future.
