Azerbaijan 03.04.2026 Why bad loans are rising in Azerbaijan JAMnews Baku Share Share Non-performing loans in Azerbaijan represent a significant risk for borrowers, banks, and the wider economy. As of 1 February 2026, the volume of overdue loans stood at 557.5 million manats (approximately $328 million), increasing to 562 million manats (around $330 million) by 1 March. This represents an approximately 0.8% rise compared to the previous month.
The annual trend also indicates a notable increase, with non-performing loans reaching 562 million manats as of 1 March 2025, an 17% rise from the 2024 figure. The rise in these loans isn’t a sudden event, but rather the result of several historical waves. A major surge occurred in the mid-2010s following a significant devaluation of the manat.
When the currency weakens, debts in manats become more expensive for borrowers earning in manats. The state intervened in 2019 with a mechanism to address this burden, but the trend has recently reversed. Over several years, starting from 2020, there was a steady decline in overdue loans, reaching 893.1 million manats in 2020 and decreasing to 437.8 million in 2023.
However, by the end of 2024, the figures began to rise again, reaching 562 million manats as of 1 February 2026. This increase is linked to several factors, including a widening gap between incomes and expenses, rising inflation, and high interest rates on consumer loans. Many households struggle to meet their financial obligations due to increased costs for essentials like food, rent, and healthcare.
The expansion of consumer lending also contributes to the problem, as borrowers take on more debt. Lenders’ sometimes overly relaxed risk assessment practices further exacerbate the situation. The Central Bank of Azerbaijan has implemented measures to mitigate these risks, but the underlying economic pressures continue to drive the increase in bad loans.
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