Azerbaijan examining need to revise consumer basket (UPDATE)
Details added (first version posted on 14:14)
Baku, Azerbaijan, Feb. 24
By Azad Hasanli - Trend:
Azerbaijan's Ministry of Labor and Social Protection of Population monitors markets to study the need to revise the consumer basket due to the change in the Azerbaijani manat's rate, the minister of labor and social protection of population, Salim Muslimov, said Feb. 24 at a press-conference.
Muslimov said that from Feb. 23 the relevant structures of the ministry have been conducting monitoring.
"Unfortunately, in all countries, where there is a weakening of the national currency, the speculation in the markets is a common thing," the minister said. "In such a case, the antimonopoly structures should strengthen the administrative measures. In our case, the economy ministry deals with this, and, according to the available information, it [the ministry] conducts enhanced work in this direction."
Muslimov also said his ministry will send the results of the monitoring to the government, and then the appropriate action will be taken.
The minister noted that the decision to change the manat rate will in general allow preventing deflation, which has been observed in the country since late last year.
"Deflation has been observed in Azerbaijan since November last year," he said. "This is a very dangerous process that can lead to a decrease in production, causing unemployment and stagnation, so it was necessary to take certain measures."
"Aside from that, all of our major trading partners, such as the euro-zone countries or neighboring countries [Russia, Kazakhstan, Iran, and Turkey] have a serious decline in the national currency. Could it be possible in such a situation to leave manat's rate at the same level, and face inflation?"
He added that in 2008, Azerbaijan avoided a financial crisis thanks to the fact that the government put major funds into circulation, but today it is impossible to do.
Muslimov said that in 2008, some 435 million manats were directed to finance pensions, but currently this figure stands at 1.1 billion manats.
"Aside from that, pay attention to the pace of decrease in the national currencies' rates in neighboring countries. At that time, there were no such paces," he said.
Muslimov added that given these facts, the decrease in manat's rate is a well-considered and necessary decision.
On Feb. 16, the Central Bank of Azerbaijan (CBA) decided to waive the manat peg to dollar and transition to a two-currency basket using the US dollar and the euro in determining the rate of manat.
Under CBA's decision, from Feb. 21, the official exchange rate of the dollar against the manat was set at 1.05 manats/$1.
The official rate of the US dollar and the euro against the Azerbaijani manat as of Feb. 24 is set at 1.0501 manats and 1.1906 manats respectively.
Follow the author on Twitter: @AzadHasanli