The sharp devaluation of the manat is quite real - expert

In Azerbaijan there are prerequisites for  sharp devaluation of the national currency, says economic expert Nemat Aliyev. According to him, the rate of national currency may fall to 2 manats per 1 US dollar. In an interview “Cetin Sual” of  with Turan agency the expert pointed out that in summer the rate of national currency to the dollar and the euro fell  by 10%, and rates of commercial banks - by 13-14%. The expert considers "logical" limit of foreign currency sales in the banks, which also lost the trust to the manat, and seek to insure their risks.  The  activation of the "black market" partially meets the needs in the currency, so the fight against this phenomenon only by administrative methods is ineffective. The  expert sees the reasons for this situation in the weakness of the non-oil sector and the negative balance of trade in the country. The positive balance in foreign trade transactions totaled $8.2 billion in 2014, in 2015 - $2.2 billion. Over seven months of this year, imports have prevailed over exports at $167 million, he said. "With the reduction of the inflow of foreign currency the rate of AZN  drops. The reserves of the Central Bank of the country declined for two years from $15billion to $4.2 billion.   The CBA has stopped foreign exchange intervention to support the manat, and the State Oil Fund seeks to preserve foreign reserves.

In the second quarter, SOFAR actually suspended transfers to the state budget.

So, in the first half of the year State Oil Fund transferred to the state budget 3.8 billion manats, but in fact  it transferred 1 billion 760 million manat, and only 100 million manat in the second quarter of the year.

The expert sees this desire  of  SOFAR to hold  currency reserves in anticipation of the new sharp devaluation to perform budgetary commitments already at the new rate, using less amount of currency.

Despite the volume of the state budget in dollar terms decreased from 25 to 11 billion dollars, the government does not provide the revenue and expenditure side of the budget. In June, the state budget revenues from income tax decreased by 49.4%, indicating that the closing of enterprises and jobs.

Collection of income tax decreased by 22%, simplified tax – by 44%, VAT  by 35%.

The latter figure is an indicator of the economy contraction, the expert said.

The expenditure part of the budget is executed only by 25% in the first half of the year, indicating the government's disability to enforce budgetary targets, and will be forced to resort to a new sharp devaluation, said Nemat Aliyev.

 The expert sees the ways out  of the situation in urgent measures for the development of non-oil sector, to eliminate monopoly and corruption, creating an environment for fair competition, ensuring the freedom of enterprise and liberal environment in  economy.--06D--