Depletion of Foreign Exchange Reserves to Continue until Parliamentary Elections

The power has never gone to the polls under such difficult conditions after the start of the period of the big oil money: the national currency loses purchasing power and there is no growth in the structure of non-oil exports. And there is no other way but to cut the state budget.

The economist Rovshan Agayev believes that the state budget for 2016 will be 15% or even 25-30% less than the approved figures for the current year. There is simply no other way. "It will depend on a political decision. The state budget has long been a subject of political ambitions," the expert said.

The flow of money coming to Azerbaijan has reduced and cash outflows are growing. The national currency, due to the international and domestic economic processes (reduction in world oil prices, etc.), is again under pressure. There is a situation where the depletion of foreign exchange reserves of the country has become an irreversible process.

"In February, the government somehow tried to prevent the growth of prices for goods and services. In many areas they managed to avoid the rise in prices after the devaluation of the manat to the US dollar by 34% due to entrepreneurs who did not raise prices by cutting profitability. But this time, the government will fail to do this, as the "exposure limit" of business is exhausted," emphasized Rovshan Agayev. And it does not promise anything good to the social well-being of the population.

According to the Central Bank, in July of this year, its currency reserves decreased $ 18.7 million. After the February devaluation from March to July this year, currency reserves fell from $ 11 billion 4.4 million to $ 8 billion 501.5 million. Recall that on 31 July 2014 CBA foreign exchange reserves were equivalent to $ 15 billion 193.4 million. In annual terms the Central Bank's foreign exchange reserves depleted $ 6 billion 691.9 million.

Dynamics of Foreign Exchange Reserves Depletion from June 30, 2014 to 31 July 2015:

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