RESOLUTION OF THE CABINET OF MINISTERS OF THE AZERBAIJAN REPUBLIC

of April 6, 2007 No. 62

About approval of Rules of transfer to management of free remaining balance on the single treasurer account within fiscal year

For the purpose of ensuring execution of Item 1.3 of the Presidential decree of the Azerbaijan Republic "About application of the Law of the Azerbaijan Republic "About modification and amendments in the Law of the Azerbaijan Republic "About the budget system" of December 22, 2006 the No. 496 Cabinet of Ministers of the Azerbaijan Republic decides:

1. Approve "Rules of transfer to management of free remaining balance on the single treasurer account within fiscal year" it (is applied).

2. This resolution becomes effective from the date of signing.

Approved by the Resolution of the Cabinet of Ministers of the Azerbaijan Republic of April 6, 2007 No. 62

Rules of transfer to management of free remaining balance on the single treasurer account within fiscal year

1. General provisions

1.1. These rules are prepared for the purpose of ensuring execution of Item 1.3 of the Presidential decree of the Azerbaijan Republic "About application of the Law of the Azerbaijan Republic "About modification and amendments in the Law of the Azerbaijan Republic "About the budget system" of December 22, 2006 No. 496 and according to the Law of the Azerbaijan Republic "About the budget system", and also other regulatory legal acts of the Azerbaijan Republic, and determine the controling mechanism free remaining balance on the single treasurer account, and placements them in reliable banks under appropriate conditions by transfer to management.

1.2. Management of means of free remaining balance according to these rules or transfer them in trust management pursues the aims of data protection of means from depreciation and receipt of additional income in the government budget.

2. Organization of management of free remaining balance and its transfers to management

2.1. Means of free remaining balance are operated by the Ministry of Finance of the Azerbaijan Republic or are transferred to the control to the structure having wide experience in management of currency means.

2.2. Transfer of means of free remaining balance to management is performed based on the agreement, the agreement and other documents of title and bargains concluded between the Ministry of Finance of the Azerbaijan Republic (further - the principal) and person accepting in management (further - entrusted).

2.3. The prisoner between the principal and entrusted the agreement, the agreement and other documents of title, shall reflect the following conditions:

* Rights and obligations of the principal;

* Rights and obligations confidential;

* Terms of transfer of means to management and their return;

* Responsibility of the parties;

* Payment for management and source of payment;

* Dispute resolution.

3. Directions of management of free remaining balance and its placements

3.1. Management of free balance or transfer to management and establishment of the directions of placement is performed by board of the Ministry of Finance of the Azerbaijan Republic. At the same time it is necessary to see the predicted amount of free balance (investment portfolio) which will be transferred to the control, requirements for liquidity and credit risks, and also degree of profitability of the predicted free balance.

3.2.  No. 119 is excluded compliance with the Resolution of the AR Cabinet of Ministers of 18.07.2011

3.3. Means of free remaining balance can be invested in the following financial instruments:

* Deposits of Central Banks of the countries with investment rating, the commercial banks and other financial institutions having rating not below the AA-long-term credit rating (Standard & Poor's or Fitch) and Aa3-(Moody's);

* Cash (liquid) funds with the credit rating of AAA (Standard & Poor's or Fitch, or Moody's);

* The debt securities issued by the governments, the state agencies or financial institutions of the countries having the state guarantee with investment credit rating on long-term obligations (Standard & Poor's or Fitch, or Moody's);

* The debt securities issued by international financial institutions (The World Bank, the European Bank for Reconstruction and Development, Asian Development Bank, etc.)

* The debt securities issued by commercial banks and other financial institutions with investment credit rating on long-term obligations (Standard & Poor's or Fitch, or Moody's).

3.3-1. Free balance is also placed on term deposits of five largest credit institutions which received the international credit rating on the level of capitalization and the size of the assets having the banking license in the Azerbaijan Republic, or the debt securities issued by these credit institutions.

3.4. For the purpose of management of free balance to this area specialized local and foreign institutes (managers) are attracted. The involved external managing director or his main founder shall have credit rating not below investment credit rating (Standard & Poor's or Fitch, or Moody's) or positive practice in asset management at least 5 years, or experience in management of means at least 1 billion US dollars.

3.5. When attracting to management of means of free remaining balance of the external managing director, from its party the investment portfolio, in addition to above-mentioned, can include also other assets, including corporate shares.

4. Restriction of investment of funds of free remaining balance and its currency content

4.1. Features of placement of the means delivered in trust management in the corresponding currencies are determined by the prisoner between the principal and the confidential agreement, the agreement and other documents of title, or are charged confidential.

4.2. Means of free remaining balance cannot be spent in other directions, including for acquisition of valuable metals and gemstones, any real estate and goods.

5. Report on management of means of free remaining balance

5.1. During management of means of free remaining balance confidential once a month, in the form established by him submits to the principal the status report of the account on which means, amount of means, and also about the transactions performed during the accounting period and the gained income are placed.

5.2. The principal quarterly informs the Cabinet of Ministers of the Azerbaijan Republic with separate specifying of movement of the means of free remaining balance and accounting of income gained from their management transferred to the control.

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