Gubad Ibadoglu: Get Ready for Second Wave of Devaluation of Manat

"The Azerbaijani government is required to predict the revenues and expenses of the State Oil Fund (SOFAR)," Doctor of Economics, leader of the Movement for Democracy and Prosperity Gubad Ibadoglu told Turan.

According to him, there are many risks, for admission to the Fund this year will be 1.6 billion manat less, and transfers from it to the state budget will remain at the same level - 10.4 billion (53.6% of the budget revenues). In other words, there will be tension in the performance of the revenue side of the two positions.

The revenue part of SOFAR for 2015 was approved by the Milli Majlis at the level of 10.2 billion AZN, 9.74 billion of which must be received at the expense of profit oil. That is, if by 21 February the execution of the revenue part of the Treasury needed $ 13 billion, after the devaluation $ 9.7 billion is needed. In other words, SOFAR income after depreciation in the currency-year decreased by $ 3.3 billion (13 minus 9.7).

In this situation, the leadership of the country has two options to solve the problem of SOFAR's return. One is hypothetical - the average price of the local sort of oil should not be less than $ 75 per barrel. The first quarter is over with minus 20 USD from the wanted figure, and a trend toward a significant increase in prices for oil is not expected. In this case, the government should wait for price increases to $ 83, to compensate for the loss.

The second option is another devaluation of the national currency at the rate of $ 100 to 150 manat. This is a more optimal approach, so that the public will have to prepare for a second wave of lowering the standard of living - but now it will be not 35%, as it was on February 21, but 50%. For example, even with the rate of oil production with an average price of $ 60, SOFAR's revenue will be 6.3 billion manat, and to achieve the level of 9.7 billion it will require an additional 3.4 billion. Since the government has no additional sources of funding, it will again have to put forward the head of the Central Bank and make him announce a new wave of devaluation in the second half of the year, or maybe even earlier. --17D-