By Mirsaid Ibrahimzade
The process of compensating US dollar loans of the Azerbaijani population, on which people suffered losses as a result of the devaluation, has been fully completed.
Elman Rustamov, chairman of Central Bank of Azerbaijan (CBA), made the remarks at the meeting on the country’s socio-economic sphere.
Previously, Azerbaijani President Ilham Aliyev signed a decree on additional measures in connection with solving the issue of the individuals’ problem loans. The decree envisaged the payment of compensation to citizens whose loan burden increased as a result of the devaluation of the manat in February and December 2015.
Rustamov stressed that there is a decrease in interest rates in the economy.
"Despite the general fund forms consumer loans with high interest rates, the average value of this indicator on business loans is 11 percent, which is close to our discount rate,” Rustamov said. “This shows that the interest rate policy of the Central Bank began to play an important role in the formation of interest rates, both on business loans and on the population’s deposits.”
He added that dollarization of the population’s deposits dropped from 85 to 56 percent in 2016, while loans - from 52 to 35 percent.”
“The credit activity is underway,” Rustamov stressed. “The volume of loans increased by 3.6 percent in January-June 2019. Consumer loans mainly accounted for this growth - nine percent, while business loans, loans in the real sector decreased by 0.3 percent.”
Rustamov emphasized that the growth of consumer loans should be carefully monitored and, because the growth in the debt burden of the population as well as its approximation to 50 percent in the portfolio of the banking sector may cause problems in the future.
He also noted a great liquidity in the banking sector against a background of absence of increase in the number of business loans.
Touching on inflation rate in Azerbaijan, Rustamov stated that it is below the target level set by both the government and CBA.
He stressed that under the strengthening of social policies and the expansion of domestic demand, the inflation rate remains low, which stems from a general improvement in economic management and stability of the manat.
“Inflationary expectations play a very important role in managing inflation. Together with the State Statistical Committee, we conducted surveys in more than 4,000 households. Overall, the number of people expecting inflation to accelerate by the end of the year makes up 2 percent – that is to say, 98 percent of the population do not believe that it will grow by the end of the year,” Rustamov pointed out.
Given the low inflation rate, the CBA is consistently taking steps to ease monetary policy. "We have reduced the discount rate from 18 percent in 2018 to 8.25 percent," he said.
CBA is taking steps to ease monetary policy. It managed to reduce the discount rate from 18 percent in 2018 to 8.25 percent.
Moreover, he added that CBA plans to complete 2019 with a yield of 3.2 percent. Rustamov said that the Bank’s foreign exchange reserves are growing and since the beginning of the year, they have grown by more than $330 million.
“The surplus of Azerbaijan’s external trade balance has reached $2.9 billion,” he added. “The export of the non-oil sector grew by 15 percent.”
Rustamov also added that Azerbaijan’s strategic currency reserves greatly increased, reaching $49 billion.
Besides, he stated that along with the sterilization of the CBA, the surplus exceeds $1 billion in the domestic foreign exchange market, which ensures the stability of the manat rate.
Mirsaid Ibrahimzade is AzerNews’ staff journalist, follow him on Twitter: @MirsaidIbrahim1
Follow us on Twitter @AzerNewsAz