New devaluation is inevitable, expert

Economic expert Samir Aliyev said that Azerbaijan's financial market is expecting  a new wave of devaluation, even though banks are still suffering from the first devaluation in February of this year.  In an interview with Turan news agency, he said that during the first devaluation  the banks have suffered millions in losses, mainly due to bad loans and problems with payment of interest on deposits. "The banking sector is undergoing a lot of stress. The central bank deprived the licenses of two banks and a few banks are ready to leave the market. No less than a third of existing banks operate at a loss," he said. Now  is observed the fall in oil prices, the overall global crisis in the world, the fall of the ruble and the rest of the neighboring currencies.

Another big problem for Azerbaijan is the flow of capital, the closure of large companies and the fact that large foreign companies are  leaving Azerbaijan. All this puts pressure on the manat, increasing panic in the market. Unfortunately, the relevant government agencies, led by the Central Bank does not provide the public with the necessary information.

It is not difficult to predict the terms of the new devaluation. Now the price for  oil is again close to 40 dollars, but the head of the Central Bank Elman Rustamov asserted that the negative impact on the financial situation will not be as long as oil falls to 40 dollars. "So, I think that a new devaluation - a matter of time," said Samir Aliyev. The world prices are falling, but in Azerbaijan, everything happens on the contrary; the expert said that the Azerbaijani market is not adequate to what is happening. For example, at the beginning of the year in Russia prices for  goods fell sharply, but in Azerbaijan, these products were sold at the same prices.

The prices for oil in the  world market became  much cheaper, but no one in Azerbaijan felt it. The similar situation is with petrol.  World prices have fallen by half, and the price for petrol in Azerbaijan remained the same. The reason for all this is corruption in the customs, monopoly and the absence of a liberal economy, he said. What will be the consequences of a new devaluation of the manat?  Asking  this question Samir Aliyev said that the expensive national currency - is good, but only on one side. So, as the devaluation of the manat means sharp rise in price of imports. If to take into account that most of the raw materials for products  manufactured in Azerbaijan are imported, it means higher prices for domestically produced goods.

Rising prices will spur inflation, and will badly affect  the banking system: it is necessary to wait for cut  in the insurance system, public investment sector and in government agencies. In short, all this can create a huge social tensions.

The worsening economic situation in Russia will inevitably affect the Azerbaijanis working there, whose return will increase the tension in the regions of Azerbaijan.

"The way out of the situation is the liberalization of the economy: first, it is necessary to simplify the customs system, to develop small and medium businesses, to create a competitive environment to provide entrepreneurs with cheap loans, to isolate them from the arbitrariness of the officials," said the expert. -03 / 05-