Collapse of Manat Caused Stir in Trade and Rise in Prices

Contrary to the statement of the State Service for Antimonopoly Policy and Consumer Protection under the Azerbaijan Ministry of Economic Development to strengthen control over artificially inflating prices and abuses in the consumer market due to changes in exchange rate of manat, on Saturday and Sunday the prices of some goods and services increased.

 Most price increase was observed for cigarettes. Their value depending on brands has increased from 0.2 to 0.6 manat. In some places, cigarettes went up by 2 times.

 In many supermarkets the population in anticipation of soaring prices make large purchases of essential products for the future. Several shops have closed in order to avoid losses.

Prices rose sharply for air tickets. Tickets for flights Baku - Istanbul - Baku and Baku - Moscow - Baku increased respectively from 260 manat to 340 manat and from 350 manat to 470 manat.

 Travel agencies also state the inevitable rise in prices for tour packages.

 Several pharmacies also closed on Saturday. Pharmaceutical products in Azerbaijan are mainly imported.

 On Saturday, trading currency at banks and exchange offices resumed in the evening. Buying the dollar made AZN 1.04 and selling made AZN 1,055.

Large amplitude was in trade with the euro. It cost 1.18 manat, and the selling rate ranged from 1.21 to 1.23 manat.

 The opposition has strongly criticized the CBA decision to devaluate the manat.

 The leader of the Popular Front Party of Azerbaijan (PFPA) Ali Kerimli said the decision is "robbing people at the state level."  "Millions of Azerbaijanis are robbed at the state level," he wrote on his page on Facebook.

 This decision means that only bank depositors suffered losses at 1 billion dollars. "So, yesterday deposits of citizens in banks in Azerbaijan amounting to 4 billion manat were equivalent to 5 billion dollars, and today, they are less than 4 billion USD," said Kerimli.

 He pointed out that "this behavior of the authorities is a demonstration of ignoring the interests and aspirations of the people."

 "We have long been saying that the repression made by the authorities, the suppression of civil society, and weakening the force of the opposition harms not only the fighters for freedom. If people are closed their mouths and their hands and feet are tied, then all will suffer from this. The authoritarian regime without feeling any obligation to report to the people can do any lawlessness. If the country had a normal parliament, free elections, the press, independent television, and strong public support of the opposition, the government would not dare to take such a reactionary decision," said Kerimli.

 In turn, the Musavat party regarded the decision of CBA as "contrary to the interests of the people." The party stated that the devaluation of the manat "will collapse the national economy choking in a swamp of corruption."

 Musavat believes that "the collapse of the manat will cause the failure of banks and finally destroy the small and medium business already languishing from bribery and corruption."

 Musavat considers the devaluation of the manat against the US dollar by 33.6 per cent is "the collapse of the economic policies of the government and the recognition of the onset of a great economic crisis."

 Musavat demanded "prosecution of officials responsible for financial policy and a report from the government under the leadership of President Ilham Aliyev for such irresponsible behavior."

  The Executive Secretary of the movement Republican Alternative, economist Natig Jafarli believes that the CBA decision will lead to "dollarization" in the country. "Real estate, cars, gold, furniture will again be sold for dollars. True, intervention of the President and some adjustments to the exchange rate are possible as political means. Nevertheless, food inflation will be not less than 20-25 percent per year. Banking and financial credit system will experience stress and some banks will be closed. Citizens that have obtained mortgage, car and personal loans in dollars will become insolvent and the government should adopt a program of assistance to them," wrote Jafarli on his page on Facebook.

In his view, the government must begin to develop an anti-crisis program with the participation of independent economists. Otherwise the government should resign and a technical government should be formed, Jafarli believes.

"We need to immediately eliminate bribery and interference in the affairs of business and the protection of monopoly by the customs and tax authorities. There should be created a new political situation with the liberalization of political freedoms, or processes in the country may open the door to chaos," said Jafarli.

 Recall that on Saturday the Central Bank of Azerbaijan set the official exchange rate of the national currency at 1.05 manat per 1 US dollar, against 0.78 manat per 1 US dollar on Feb. 20. The rate of manat per day fell against the dollar by almost 33.5%, while against the euro it fell by 30%. On February 21, 2015 the official exchange rate of the dollar against the manat was set at $ 1 - 1.05 manat, and the euro - 1.19 manat. -06D--