Central Bank Opened Priorities for Period of Reduction in "Oil Money"

Avoiding deflation and the preservation of the manat will be the main tasks of the Central Bank of Azerbaijan for 2015.

Speaking on January 10 at a meeting of the Cabinet of Ministers, Chairman of CBA Elman Rustamov said that due to the decline in energy prices in the world there are processes to reduce the prices of many non-food products. Therefore, the economic policy of the government should be directed not against inflation, as it was in previous years, but against deflation, said the chief banker.

According to Rustamov, the basis of economic stability in Azerbaijan is stable exchange rate. Maintaining the exchange rate of manat to foreign currencies costs CBA hundreds of million manat, however, the government justifies this step with the desire to "preserve the living standards of the population."

CBA, following the example of the central banks of the US, EU and Japan, also offers monetary expansion, i.e., "pumping" of additional money supply in the economy. This, according to analysts of the Central Bank, will revive economic growth and affect the employment level.

In 2015, CBA will also make efforts to reduce the interest rates on bank loans.

Note that experts consider the position to save the "strong currency" as refusal of economy directed to export and the choice of economy dependent on imports (http://rovsanaghayev.blogspot.com/2015/01/valyutalar-doyusmur-amma.html?spref=fb), as the more expensive the national currency, the better is not to produce, but to import goods.

Experts also remind that the strengthening of the national currency is one of the symptoms of Dutch Disease, typical of countries rich in natural resources.

Over the past 5 years, the average interest rates on bank loans declined by a few points and amounted to 14.3% in 2014, and on commercial loans they got to 10.8%. 08B