The masrket of finance and money of Azerbaijan is in crisis after the manat was subjeted to devaluation twice, said leader of the Movement for Democracy and Prosperity, economist Gubad Ibadoglu.
"Financial market participants - banks, insurance companies, investment institutions were seriously affected by this. Now a growing number of bad loans and the position of banks continues to deteriorate.
At the same time, insurance and investment companies cut opportunities as the process of restriction of of financial operations in the market is ongoing," said Ibadoglu in an interview with Turan and radio
"Voice of America." Today 2.5 milion of citizens have obligations to the banks, major credit, and the banks have obligations on deposits. Therefore, the crisis of the banks, their closure can lead to panic and turmoil in society, said Ibadoglu.
Regarding the depreciation of the dollar in recent days, the expert said that the CBA policy on consolidation of manat in unfounded: decline in GDP, oil prices are low, there is no foreign exchange earnings. Under such a situation the rate of manat will driop in ratio to dollar. However, the CBA works for the increase of the rate of manat, despite the restrictions of foreign exchange reserves.
Despite the creation the Chamber of Control for the financial markets, coordination of the Ministry of Finance and the Central Bank is not visible, jusr like the Cabinet of Ministers.
Under such conditions the CBA limits monerary mass trying to adjust the policy of manat rate to control inflation by its hard policy. At the same time, the Minstry of Finances is trying to save on the cost of the state budget, not mastering in the first quarter even a quarter of the budget allocation. As a result, business activity and purchasing power is falling. As a result, over twomonths the GDP reduced by 3.2%.
There is still no comprehensive reform program, it has not been determined who carries out these reforms. Reform Commission created under the direction of Assistant to the President does not have adequate rights and responsibilities. Its involvement in the process is limited only by the creation of the program.
Therefore, Ibadoghlu predicts continued economic downturn during the year. According to him, economic indices and income of people will decline, business activity, purchasing power will also weaken, and unemployment and social tensions will grow.
The CBA shall carry out economically reasonable rate policy in order to create a real exchange rate of manat.
The Ministry of Finance should finance not only the running costs but also capital investments, to contribute to the growth of business activity. Finally, an important point is the creation of favorable conditions for business, which is impossible without comprehensive reform, and primarily in the fight against corruption.-06D-
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