According to the Accountants and Risk Professionals Association (ARPA), the main risk factor for the stability of the local banking system is the work of the Financial Markets Control House (FMCH) since its protection of the rights of depositors and investors is financed by banks, and this creates a clash of interests. To avoid this, the financing should be passed to the depositors and investors themselves with the introduction of a new tax.
In addition, the financial market is not developed to the extent that it was possible to keep such a regulator as FMCH, although the government has centralized financial supervision. Banks need a donor of liquidity of the assets of troubled banks, and the House is not ready for this, because it is not such a donor, in contrast to the Central Bank of Azerbaijan.
The second group of risks is related to the fact that the banking sector still has not learned to work with the public, Parliament and the regulator – in a quarter of a century, none of the attempts of the Association of Banks of Azerbaijan to defend corporate interests ever succeeded. As a result, the banks are vulnerable to reputation risks and cannot form economic models. In this case the depth of the banking sector (the ratio of its assets to GDP) in Azerbaijan is only 33.8%, while it is 52.4% in Russia, 70-80% in Eastern Europe, and 373.8% in Japan.
The third group of risk is associated with the finance, especially with the currency market. Transfer of the trade of the Central Bank to the trading system in 2011 led to the actual creation of a "tax haven" instead of the market.
The fourth group of risk is about the insurance market. According to the experts, insurers are unable to hedge their currency risks, and the local reinsurance is not able to become a source of foreign exchange inflows into the country.
According to experts, the main causes of the crisis in the local economy are linked to the control system – there is a need to establish close relationships with multinational companies that have significant management experience, to let them into the country to restart its economy. --17D-
Economics
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According to the State Customs Committee, in the first eleven months of this year, Azerbaijan transported 6.96 million tons of cargo by rail, worth $3.01 billion. This represents a 4% decrease in volume and a 10.1% decline in value compared to the same period in 2023.
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The Cabinet of Ministers of Azerbaijan has approved a set of regulations to govern the approval of agreements under the country’s competition law, aimed at fostering compliance with legal frameworks and enhancing market transparency.
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Azerbaijan's ambitious program to restore territories liberated from Armenian occupation has attracted attention due to the extensive use of single-source procurement methods, raising concerns about transparency and corruption.
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Azerbaijan recorded a 2% increase in wheat imports from January to November 2024 compared to the same period in 2023, underscoring its continued reliance on external sources to meet domestic demand. This growth comes amid a significant decline in domestic wheat production, which decreased by 148,100 tons in 2024, further intensifying the need for imported supplies.
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