Changes in the rate of manat is inevitable, expert

In the draft budget for 2016 the year revenues are projected by five billion manats less than in 2013, which will result in severe budget cuts, said  Azer Mehdiyev, the head of the NGO "Assistance to Economic Initiatives" about this in an interview with Turan and "Voice of America". said the head of the NGO "Assistance to Economic Initiatives" Azer Mehdiyev.

Major cuts will affect investments in the industrial sector, but commitments in the social field will be maintained, the government promises. But unfortunately, the draft budget is not only submitted for public discussion, but is considered without the participation of experts. It is not possible to reflect enough  interests. As a result, the Government of draws up  the budget in accordance with its own vision, said Mehdiyev.

Azerbaijan's state budget reached its pick point in 2013 when it amounted to 19.5 billion manats. After that began the reduction of the state budget. The expert believes that even a set  forecast for 2015 will be met with a large deficit.

Mehdiyev does not share the optimism of officials that in 2016 Azerbaijan will continue growth. Previously, economic activity, public investment were provided by oil revenues. Now, however, a source of economic growth, the oil factor, is reduced.

Thus, for  capital investment will be allocated only 2.5 billion manats, against 7 billion manats last year, Mehdiyev said.

Does the government adequately responds to the global financial - economic crisis?

Answering this question Mehdiyev said that the fall in oil prices does not mean that this was the global financial crisis. It is true the oil price affects the financial markets. Thus, in the period of rising prices, some sectors of the economy were  artificially pumped like a soap bubble. Now all this is sharply reduced.

At the same time, the fall in oil prices contributes to economic growth in Europe and the United States. Although for Azerbaijan it is, of course, the crisis.

The government doesnot have yet an adequate position when  fall in oil prices began began  in the middle of last year. It hoped that the decline will be short-lived, and the oil price will rise again. In addition, the government has not established priorities in conditions of low oil prices.

Azerbaijan, always refers to the concept of Azerbaijan 2020. However, this is general declaration, there is no strategy and solutions to problems. "Today we can not say whether the government has  strategic program of the government?" said the expert.

Responding the question  bout the possibility of a new devaluation, Mehdiyev drew attention to the divergence of approaches on the issue of the Central Bank  of Azerbaijan (CBA) and the Ministry of Finance.

If the Central Bank  of Azerbaijan said that manat will be stable for several years, the Ministry of Finance said the devaluation of the benefits and opportunities to take this step.

The devaluation in February was aimed not only to prevent a rapid decrease in foreign exchange reserves, and was dictated by the need to fill budget. Therefore, devaluation may be due to the economic situation in the country: the reduction of budget revenues, the need to maintain public spending at a certain level.

It is necessary to take into account the statement of the United States on the revision before the end of the year interest rates. If this happens, it be followed by  the same process in Europe. Raising interest rates will put pressure on the economic situation in Azerbaijan.

External and domestic factors give reason to believe that maintaining the current rate of manat will be difficult, the expert is convinced.

"In this sense, changes in the exchange rate of manat, is inevitable. However, the form in which it will occur will depend on the government. This can be done gradually in the form of a soft devaluation over time, or to go back to the sharp devaluation," summed up Mehdiyev.-16D-