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Indexation of Soviet deposits to require $2.5 billion in Azerbaijan

Business Materials 25 January 2012 00:00 (UTC +04:00)

Azerbaijan, Baku, Jan.24 / Trend A.Akhundov /

Return of population's deposits in the Savings bank of AzSSR before Jan.1, 1992 will require 1.9 billion manat (about $2.4 billion), member of the economic policy committee of the Azerbaijani parliament Ali Masimli told Trend on Monday.

He said a bill on deposits indexation is prepared by the parliamentary committee.

"Mechanism used in the world practice is laid in this bill. Return of the deposits will cover 2 million people, which will require 1.9 billion manat," Mr Masimli said.

He noted as a result of inventory of accounts of depositors of the savings bank deposits of about 2 million citizens worth 5.4 billion soviet roubles were on these accounts as of Jan.1, 1992.

"Some 40 per cent of these deposits were to the amount less than 2,000 roubles, 30 per cent -2,001-5,000 roubles, about 20 per cent - 5,001-10,000 roubles, over 10 per cent - over 10,000 roubles," Mr Masimli said.

He noted until now the highest exchange rate was in Lithuania where 1 soviet rouble was exchanged for 40 cents, in Belarus - 33 cents, in Kazakhstan 150 soviet roubles were exchanged for $1, which is a purely symbolic figure.

"We propose to pay 63 cents in exchange for 1 soviet rouble. This exchange rate is the highest in the CIS," Mr Masimli said.

Like in other countries, this bill envisages decrease of indexation rate with the increase of sum of deposit.

He said when returning deposits to the amount less than 2,000 soviet roubles each rouble will be counted as 0.5 manat, when returning deposits from 2,001 to 5,000 roubles - 2,000 roubles will be returned according to the above mentioned principle and the rest - 0.3 manat per rouble.

Thus, for deposits worth 2,001-5000 roubles a depositor will get 1,000 manat plus 0.3 manat for each rouble over 2,001 roubles.

"If this proposal is accepted, a person having deposit worth 3,000 roubles, will get 1,300 manat, 4,000 roubles - 1,600 manat, 5,000 roubles - 1,900 manat. For deposits worth 5,001-10,000 roubles compensation worth 1,900 manat plus 0.25 manat for each rouble over 5,001 roubles is offered, and for deposits worth over 10,000 manat - compensation worth 3,150 manat plus 0.2 manat for each additional rouble," Mr Masimli said.

He said return of deposits will be held in 3 stages and will take 6 years.

During the first year of the first stage return of deposits of less-well-off sections of population who were born before 1935, martyrs' families, disabled war veterans and invalids of the first group, and during the second year - deposits of the Karabakh war veterans and those who were born before 1940.

During the first year of the second stage indexation of deposits of those who were born before 1945 is envisaged and during the second year - of those who were born before 1950 and their heirs.

During the third stage indexation of deposits of those who were born after 1950 and their heirs will be carried out.

"The last category is small that's why return of their deposits will require less than a year," Mr Masimli said.

He noted in the 6th year on the basis of decision of the special commission return of the deposits of those who lost or didn't get savings book as well as those who for some reasons didn't get compensation.

"This will require time, since every second from 10 depositors may have such problem. Information on them will be collected after the law comes into force and payments will be made in the end," Mr Masimli said.

He noted world practice and public opinion polls show that majority of population want to get deposits in cash.

"That's why the bill envisages payment of compensations in cash and securities, they may also be transferred to the bank account of the depositor as deposit," Mr Masimli said.

He said adoption of this bill envisages also amendments to the Tax Code and law on public debt.

"We expect from the cabinet of ministers and the Finance ministry concrete actions. Bill on ensuring return of deposits to population, mechanism of return, letter of explanation concerning certain paragraphs of the bill as well as bill relating to which amendments are necessary to make into the current legislation to ensure return of deposits are already developed by the parliamentary committee on economic policy," Mr Masimli said.

The official exchange rate is 0.7862 AZN to $1 on Jan.24

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