BAKU, Azerbaijan, Feb. 10
By Eldar Janashvili – Trend:
Azerbaijan is taking a lot of measures to curb inflation, Trend reports referring to Executive Director of the Azerbaijan Center for Economic Reforms Analysis and Communication Vusal Gasimli.
“A decrease in the manat turnover in 2019 by six percent is also useful for ensuring the cash balance,” the executive director added. “Otherwise, inflation may accelerate in terms of rapid GDP growth, if the money circulation rate also increases amid the growth of money supply.”
“All monetary aggregates (M0, M1 and M2, M3) increased in 2019, but the ratio of the monetary base to the money supply in manat terms (M2) decreased,” Gasimli said. “The ratio of the money base to the money supply in expanded terms (M3) has also decreased.”
“This clearly shows that the Azerbaijani banks are having difficulty by creating money through deposit operations and credit operations,” the executive director said. "This means that growth of deposits and loans is 4-5 percent less than the growth in money supply. The deposits and loans must be in demand to increase the money multiplier."
“The money supply in circulation is regulated through deposits and notes of the Central Bank, reserve requirements, as well as state bonds of the Ministry of Finance, which stabilizes the manat rate,” Gasimli added. “The Central Bank and the Ministry of Finance jointly sterilized more than $700 million in 2019.”
“Taking into account that nominal income of the population also increased by 7.4 percent in 2019, we will witness a rapid growth in demand amid which the non-oil economy must also demonstrate the acceptable growth rates for the import not to accelerate or for us not to finance foreign producers anymore,” the executive director added.
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