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Recommendations Developed to Divert Impact of Crisis Fluctuations from Participants of Azerbaijan’s Real Economy

Business Materials 10 November 2008 18:25 (UTC +04:00)

Azerbaijan, Baku, 10 November / Trend , corr. N.Ismayilova / The worldwide financial crisis did not affect the activity of agricultural processing enterprises or agricultural sector in Azerbaijan, Faig Abbasov, executive director of Finre Conculting, said.

"Since the Azerbaijani capital market slightly depended on foreign capital, absence of speculative and short-term deals have practically prevented the negative impact as in case of neighboring countries including Kazakhstan and Russia," Abbasov said.

Owing to this fact, Abbasov said, the bank and financial sectors avoided the damage and a negative impact such as capital outflow, drop in quoting share prices, or volatility of national currency has not been observed.

"Due to foreign factors, which have been correlating with the financial crisis, and reduction of liquidity in financial and loan segments on foreign markets, Azerbaijan's banking sector faced some restrictions in access to borrowing from outside," Abbasov said. So, by switching to more conservative method banks have dramatically reduced proposals on loan deals.

According to Abbasov, the Government demonstrated its adequate response once again and supported the financial sector and did not leave it the mercy of fate. The Government reacted to the situation in a flexible way and corrected the levers of money and loan and fiscal policy to support the financial sector and softened the requirements on compulsory reserves and issue short-term basis tax privileges to cancel income taxes, which as a result provided additional liquidity and stability in this segment of market.

"Companies which were involved into the project, according to analysis, allow to estimate their activity as stable," Abbasov said.

Participants involved in in the agriculture processing sphere, are capitalized enough and many of them successfully formed trade goods brands in domestic markets, which gave certain priority, with current experience and history. 

"In this context, the enterprises are ambitious to step up competitiveness which focuses mainly on forming potential, to offer goods at a suitable price that can replace import with the same quality," director of the company said.

Besides, some enterprises have an access to foreign markets and compete beyond country. The preconditions for export operations with the positive trend of increase in sales abroad, points to emerging infrastructure and opportunities to expand activities in future, Abbasov said.

Finre has already revealed that under the condition of free competition, several small enterprises use this factor inadequately thus inflicting damage both to major producers and consumers. These small enterprises breach principles of using trade marks with the same brands now and then and supply low-quality goods to the market at lower prices. In this case, it is "originators" of produced goods who face outright damage and risks (here risk of image). This factor still remains a problem for major players of the market.

"However in current situation there is no precondition to say that global financial crisis has any negative impact on the activities of companies and on the sector as a whole," Abbasov said. "The consulting company has put a stress on management of both separate and systematic risks within the frames of strategic planning in order to divert impact of crisis fluctuations from participants of Azerbaijan's real economy in future".

The introduction of required approach on management of risks will allow to respond to all internal and foreign situations and to ensure relevant decision to reduce undesired fluctuations on production in these companies.

Finre Consulting has been involved in the government supported project since August of 2008 to offer consulting services to some privatized agricultural processing companies of Azerbaijan. State Property Management Committee has initiated the project.

The correspondent can be contacted at : [email protected]

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