BAKU, Azerbaijan, Jan. 5
By Zeyni Jafarov - Trend:
The International Monetary Fund (IMF) previously stated that the global economy will decline by 4.4 percent by late 2020, by 5.8 percent - in developed countries and by 3.3 percent - in developing countries, excluding China, Vusal Gasimli, Executive Director of the Center for Analysis of Economic Reforms and Communication (CAERC) of Azerbaijan told Trend.
“By the end of 2020, an economic decline of nearly 4 percent was forecasted in Azerbaijan. The countries that are trade partners of Azerbaijan were also projected to decline economically, in particular by 4.1 percent in Russia and by 5 percent in Turkey and Iran. Based on these indicators, it was possible to state the economic recession in Azerbaijan in 2020 will be milder,” said Gasimli.
“Last year, the ratio of total public debt to GDP in Azerbaijan is approximately 4 times less than in the world. According to surveys by the European Bank for Reconstruction and Development (EBRD), 30 percent of middle-income countries and 50 percent of low-income countries were forecast to have a debt crisis,” the CAERC director said.
Gasimli noted that Azerbaijan had managed to maintain debt stability in the fight against external shocks, relying not on external, but on its own resources.
“In 2020, additional financial support worth 2.3 billion manat ($1.35 billion) was created to balance the declining revenues and growing expenditures of the state budget,” he said.
“Also, the implementation of a soft countercyclical budgetary policy in 2020 with a temporary suspension of the application of the budgetary rule proved to be effective in combating the crisis. Easing of monetary policy amid an increase in money demand and a decrease in the discount rate was associated with a policy of fiscal expansion. Thus, the main goal of fiscal and monetary policy was to maintain a balance between macroeconomic stability and economic activity. At the expense of the funds worth 3.5 billion manat ($2.05 billion) mobilized for fighting the coronavirus pandemic, the economic recession was mitigated, macroeconomic stability was maintained, employment support and assistance to entrepreneurs were provided, social projects were expanded, bank loans were restructured, and guarantees and subsidies were provided,” the expert said.
Gasimli also stressed the strategic foreign exchange reserves of Azerbaijan had remained practically stable, and the current account balance became close to equilibrium.
“However, the developed countries are expected to have a current account deficit,” he said.
“In 2020, Azerbaijan was also among the few countries that had managed to maintain a stable national currency. A decisive role in regulating the manat rate was played by foreign exchange auctions held by the State Oil Fund of Azerbaijan (SOFAZ) at the Central Bank (CBA). Macroeconomic analysis shows that Azerbaijan's economy is more resistant to crises and the current account is maintained at the expense of oil prices in the $40-45 range,” he said.
Earlier, Chairman of the Central Bank of Azerbaijan (CBA) Elman Rustamov also announced the stability of the manat and a stable macroeconomic situation in Azerbaijan.
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