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Gazprombank forecasts preservation of Central Bank of Azerbaijan's interest rate

Finance Materials 18 December 2020 09:34 (UTC +04:00)
Gazprombank forecasts preservation of Central Bank of Azerbaijan's interest rate

BAKU, Azerbaijan, Dec. 18

By Zeyni Jafarov - Trend:

The Central Bank of Azerbaijan (CBA) will decide to extend the pause in reducing the refinancing rate and keep it at 6.5 percent following the final meeting this year, Gulnara Haydarshina, Deputy Head of the Market Analysis Department of Gazprombank, told Trend.

According to her, the main arguments in favor of such a decision can be considered a shift in priority towards maintaining macroeconomic stability, increased inflationary risks from imports, and the expected peak in budget spending in December 2020.

“In mid-August of this year, the planned transfer to the state budget from the State Oil Fund of Azerbaijan (SOFAZ) for 2020 was increased by 7.5 percent to 12.2 billion manat, and budget expenditures were revised and increased by 12.3 percent. At the same time, the state budget of Azerbaijan for 11 months of 2020 was executed with a surplus of 0.1 percent of GDP, contrary to Gazprombank's expectations, an expansion of the deficit at the peak of budget spending,” said the Gazprombank representative.

Considering that the Ministry of Finance of Azerbaijan expects a deficit of 4.9 percent of GDP by the end of 2020, the peak of expenditures will occur in December this year, Haydarshina said.

In the third quarter of 2020, the Board of the Central Bank of Azerbaijan made a decision on the discount rate at 6.5 percent. At the same time, the upper limit of the interest rate corridor was left at the level of 7 percent, and the lower limit – 6 percent.

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