Azernews.Az

By Sara Israfilbayova

Azerbaijan will continue work on raising its international ratings.

Chairman of the Central Bank of Azerbaijan (CBA) Elman Rustamov made the remarks at a press conference on August 1 in Baku.

“We believe that international rating agencies do not quite correctly and objectively assess the real state of affairs in the national economy of the country, but on the other hand, I want to say that we have the potential to advance in these ratings, and we should use it,” he stressed.

Two international rating agencies - Fitch Ratings and Standard & Poor’s - approved the credit ratings of Azerbaijan. The reports of both agencies noted positive changes in the country’s economy.

Speaking of aggregate volume of international foreign exchange reserves the CBA head said that in January-June, 2018, it increased by 5.6 percent, or by $2.3 billion.

“Azerbaijan’s strategic currency reserves significantly exceeded the norm of sufficiency. During the first six months of 2018, the total volume of the country’s international foreign exchange reserves grew by $ 2.3 billion, or 5.6 percent, to $44.2 billion. As many as $37.7 billion of this amount fell on the reserves of the State Oil Fund of Azerbaijan, $1 billion - on the reserves of the Ministry of Finance, $5.5 billion - on the reserves of the Central Bank,” Rustamov emphasized.

He also said that, according to forecasts, by the end of 2018, the surplus of the balance of payments will remain.

Further, he went on to say that there is a potential for further easing of monetary policy in Azerbaijan, adding that however, it is necessary to take into account both external and internal risks when making regulatory decisions in this sphere.

To external risks, the head of the Central Bank attributed the volatility of exchange rates and the level of inflation in partner countries, to domestic - the rapid growth of imports.

“These factors can lead to an increase in inflation, which must be taken into account when making decisions on monetary policy. At the same time, inflation is in the trend of decline, fixed at an unambiguous level. For 6 months of 2018, the average annual inflation was3 percent, which is below the declared target corridor at 6-8 percent. Reduction of inflation, strengthening of the nominal effective rate of manat, optimal management of the money supply, reduction of inflationary expectations, seasonal factors - all this to a certain extent reduced the influence of inflation processes in the partner countries on inflation in Azerbaijan,” Rustamov underlined.

He also added that the Central Bank, together with other profile government agencies, is working to move to a floating exchange rate of manat.

Touching upon the discount rate, Rustamov noted that the CBA has kept it at the level of 10 percent.

The CBA also decided to keep the interest rate cap at the level of 12 percent and the interest rate floor at the level of 8 percent.

This year the CBA reduced the discount rate in February from 15 to 13 percent, and in April from 13 to 11 percent, in June from 11 to 10 percent.

Next time, the parameters of the percentage will be discussed in October 2018.

Rustamov also touched upon the change in passenger transportation tariffs in Azerbaijan, noting that this will not have a serious impact on inflation expectations.

“Of course, these prices in the consumer basket are significant. Nevertheless, we believe this change will not affect the inflation forecasts for the current year, which are 6-8 percent, that is, the effect of this factor on inflation will be minimal,” he noted.

The new passenger transportation tariffs came into force in Azerbaijan on August 1.

Presently, the metro fare is 0.3 manats, regular intracity bus fare is 0.3 manats, intercity and inter-settlement bus fare, depending on distance, is from 0.3 to 0.9 manats, intercity regular bus fare is 2.4 manats per kilometer.

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Sara Israfilbayova is AzerNews’ staff journalist, follow her on Twitter: @Sara_999Is

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