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Fixing Azerbaijani bank may dent sovereign's image

Friday, May 26, 2017

Significance

If two-thirds of creditors agree to the scheme by a July 13 meeting, the government will exchange IBA debt for sovereign loans but it has made it clear it does not bear responsibility for the state-owned bank's liabilities.

Impacts

  • Banking sector instability has negative implications for confidence and economic growth.
  • The potential increases in sovereign debt appear manageable.
  • Reducing the size of IBA will bring more competition to the banking system.
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