Azerbaijan, Baku, March 4 / Trend N.Ismayilova /
The International Monetary Fund (IMF) will continue dialogue with the Government of Azerbaijan over examination of timelines, ways and regulatory preconditions of an increase of flexibility of manat's exchange rate over a mid-term period, Nienke Oomes, Chief of the IMF team on Azerbaijan, reported on Wednesday.
Oomes had arrived in the country to hold consultations under Article IV of the IMF Agreement.
"The Central Bank of Azerbaijan (CBA) has achieved successes in keeping the financial stability at the expense of keeping a stable exchange rate of manat and instilling liquidity into the banking system. The stability of the exchange rate has allowed decreasing inflation rate, to change sharply the temporary tendency of growth of dollarization level, and to prevent negative impact on banking assets," Oomes said.
The team welcomes the CBA's intention to keep a stable exchange rate over a short-term period. However, as the economy gets diversified and the degree of integration with international capital markets increases, it will become more profitable to increase flexibility of the exchange rate, according to Oomes.
According to the studies the Central Bank conducted, a 1 percent change in manat's exchange rate brings to a 0.6 percent increase of inflation rate. Last year, the exchange rate of manat to US dollar fell by 0.2 percent (the exchange rate, as of early January 2009 and as of the end of the year, was 0.8015 manat per US $1 and 0.8031 manat per US $1, respectively).
'The IMF also recommends state enterprises including those, which received backing from the CBA in 2009, improving the risk management and corporate management system and financial discipline to exclude the possibilities of recurrence of the 2009 situation', Oomes said.
Starting from last year, the Central Bank provided financial aid to the State Oil Company of Azerbaijan (SOCAR) and joint-stock company Azeraluminiy