Baku, Azerbaijan, Oct.13
By Ilaha Mammadli - Trend:
The dollarization in Azerbaijan's economy has reached the level observed 10 years ago, Elman Rustamov, chairman of the board of the Central Bank of Azerbaijan (CBA) said.
He made the remarks during the discussions on the draft state budget for 2016 and the subsequent three years in the plenary meeting of the country's parliament.
"We accept the intensification of dollarization as normal, since it is about redistribution of funds between the population, business entities and state," said Rustamov.
It is clear that high dollarization leads to decrease in CBA's currency reserve, but that is normal and today, the currency reserve stands at $7 billion that fully meets the international standards, he added.
By the end of 2014, foreign exchange reserves owned by the Central Bank, reached $15 billion, and these funds have been fully acquired on the domestic market.
"Against the background of strengthening of the manat rate, business entities and population transferred their foreign exchange earnings by the CBA into the national currency and a reverse process happened given the new conditions," he said. "Such allocation allows to properly balance the risks of all economic actors. After the devaluation of the manat rate, atmosphere on the market was calm, and during May-July, we were even buying dollar currency on the market."
However, the head of the CBA said that the statistics didn't include data on swap transactions worth more than $ 0.5 billion, which were held by banks.
"The banks were purchasing manats from the Central Bank in exchange for dollar reserves for crediting and holding settlement transactions."
"However, the Azerbaijani population was concerned in August as a result of the sharp devaluation of the Kazakh tenge," Rustamov said, adding that this led to the need of the CBA returning to the currency market."
Rustamov said that the current situation in the global economy, namely, the decline in oil prices, in general, has reduced the strategic currency reserves of Azerbaijan.
The transfers from the State Oil Fund of Azerbaijan (SOFAZ), which are the main source of currency supply for budgetary consolidation, decreased in terms of the decline in the country's strategic currency reserves.
"The volume of SOFAZ transfers to the country's state budget amounted to about 11.4 billion manat in 2013," he said. "This figure will drop to 6 billion manat in 2016 and up to 5 billion manat in 2017. The same amount is being formed in dollar equivalent [taking into account the rate worth 1.05 manat per dollar]. In these conditions it is required to balance the foreign exchange costs with revenues, which is one of the most important tasks of the government for the coming years."
The official exchange rate is 1.0475 AZN/USD Oct. 13.
Edited by CN