“Senior officials appointed in recent years are hesitant to make independent decisions”

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Question: Why was Elman Rustamov, who headed the Central Bank for 27 years, dismissed?

Answer: The decision  on his dismissal was made long ago.  The mistakes he  made, violations of the law, etc. all these are trifles, the main thing is that the vast majority of the people did not trust him. They did not believe him, even when he spoke the truth. In both 2015 and 2020, he was appointed for another 5-year term only because the threat of devaluation was high. “The wet one has no need to protect himself from the downpour,” so he had to bear the burden of another devaluation. Now there is no such threat. Against the backdrop of global geopolitical tensions, the likelihood of a fall in oil prices is extremely small. Therefore, there are no threats to the manat either. Consequently, a good opportunity presented itself for a change in the chairman of the Central Bank. The new leader will not face the problem of the manat exchange rate for at least 1-2 years and will have the opportunity to make changes to the banking system. On the other hand, on March 7, the 5-year term of office of all 3 deputies of Rustamov expired. It was necessary either to extend their term of office, or to appoint a new chairman so that he could form his own team.

Question: It is noteworthy, that Elman Rustamov was the leader who signed the devaluation decision. During the devaluation, the aggression against him in society was much stronger. However, at that time, this step was not taken to reassure people, even two years earlier, when his term expired, he was not fired, his term was extended. But why are they getting rid of him now?

Answer:  As already  has been mentioned, he was left in office for the next devaluations. An unpopular move must be made by an unpopular person. They were waiting for the right time to appoint a new chairman. In fact, such a moment presented itself in 2017. But they were waiting for an even more opportune moment and the expiration of Rustamov's term in 2020. But the pandemic ruined those plans. And this time they didn't risk it. But, at the first opportunity, they said goodbye to him. Don't wait until 2025. In addition, the problems of the financial sector could not wait any longer. It was necessary to take decisive steps.

Question: By the way, in our interviews you always said that Elman Rustamov would be fired after another devaluation. But the devaluation did not happen. Can the manat collapse with the departure of Elman Rustamov or a new devaluation occur?

Answer: I said that he was left in office in order to carry out devaluation. He produced this in 2015-2017. In 2020, there was a real threat due to the pandemic, but it has passed. There is currently no such risk. Yes, and it is impossible to leave him in office forever.

Question: The chairman of the board of Pashabank, Taleh Kazimov,  has been appointed instead of Elman Rustamov. Who is Taleh Kazimov? Why Taleh Kazimov? Is there no other personnel in the country? What are the benefits of Taleh Kazimov?

Answer: His name was not among the candidates. Because he has no experience in government agencies. It was assumed that a person with an understanding of macroeconomics should be appointed to the post of chairman of the Central Bank. And there are such people. But on the other hand, officials are people who are involved in corruption. And Kazimov came from the private sector. He heads one of the most efficient banks in the country. There is no corruption in this bank. Management works for high salaries and bonuses. Gradually, officials should also switch to a business model without “drifts”. But it is difficult to do this with current officials. Therefore, in this context, the drive of personnel from the private sector to the monetary sector can be understood. To be honest, there is no such efficient bank in the banking sector as Pashabank. Another thing is that success depends not only on the knowledge and skills of managers. The role of the administrative factor is also great. From this point of view, Kazimov's experience in really difficult conditions is still the big question. Time will tell. But it should also be borne in mind that the leaders appointed in recent years are not as independent as the former ones. That is, not only in strategic, but even in current management, they refrain from making independent decisions, they work on the basis of consultations of the persons who nominated them. In this respect, they are more deputies than leaders.

Question: There is an opinion that the purpose of appointing the chairman of the board of Pashabank to the leadership of the Central Bank is to concentrate the country's banking system in the hands of the Pashaevs, that is, the power of the family. That is, the banking system in the country will be concentrated in one hand. To what extent is this assumption true?

Answer: Certainly, there are tendencies towards monopolization in the banking system. But there is also competition. If there was a desire to eliminate it, then Elman Rustamov would have successfully coped with this. Rustamov, appointed by Abulfaz Elchibey to the Central Bank, is a person capable of acting in accordance with the situation. From this point of view, the fact that Kazimov is the chairman of the Central Bank does not mean that he will act exclusively in the interests of the private bank he represents. Of course, if he, like Rustamov, commits illegal acts, starts discriminating against banks, etc., then our financial system may completely collapse. I hope that Kazimov was appointed not for this, but in order to develop the financial sector. Where there is no competition, there can be no development!

Question: What will change or should change in the work of the Central Bank with the advent of a new leader?

Answer: First of all, its activities must be transparent and legal. In the field of monetary policy, it is necessary to gradually move to a floating exchange rate regime. Illegal restrictions on foreign exchange transactions must be abolished. There should be an end to discrimination in the sale of dollars to banks. The same applies to loans to banks. In general, an effective system of control over financial markets should be created. For all this, first of all, it is necessary to improve the legislation. For several years now, the President has instructed to develop the Banking Code. However, you should not do it again on the basis of the standard offers of McKinsey foreign consultants worth tens of millions of dollars. In this case, the Central Bank will again be engaged in empty business. Just like the new glamorous English-speaking leaders do in other institutions. And everything remains on paper. Because the assimilation of foreign knowledge does not occur. To do real work, you need to assemble a competent team, develop a program appropriate to local conditions and execute it. Unfortunately, we have the biggest problem to assemble a competent and qualified team. Because the former leaders, like the current ones, have one similar feature: they gather around themselves not literate, creative people who are able to express their opinions, but people who fulfill their desires. The result is obvious. So let's give the new chairman 100 days. Then we will analyze his activities.