BAKU, Azerbaijan, February 4. The Central Bank of Azerbaijan (CBA) this week lowered the discount rate from 8 percent to 7.75 percent, the upper limit of the interest rate corridor was reduced from 9 percent to 8.75 percent, and the lower limit from 6.5 percent to 6.25 percent, Trend reports, referring to the Central Bank of Azerbaijan (CBA).
"This decision was made taking into account that actual and predicted inflation is within the target corridor (4±2 percent), as well as taking into account stabilization of inflation expectations and the situation in the foreign exchange market," the CBA information says.
In addition, the Central Bank of Azerbaijan has retained the inflation forecast. To note, according to the CBA's statement on the main directions of monetary policy for 2024, annual inflation in the country in 2024 is expected to be about 5-5.5 percent.
During the press conference dedicated to changes in the parameters of the discount rate, CBA chairman Taleh Kazimov named the Bank's forecasts on the surplus of the current account of Azerbaijan's balance of payments. Thus, it is predicted that the average annual surplus of the current account of Azerbaijan's balance of payments in 2024-2025 will amount to $7-$7.5 billion.
Taleh Kazimov also mentioned the growth of Azerbaijan's strategic currency reserves.
"Azerbaijan's strategic foreign exchange reserves grew by 17 percent and amounted to $68.5 billion by the end of 2023. Last year, the strategic foreign exchange reserves of the Central Bank of Azerbaijan grew by 29.1 percent to $11.6 billion," he said.
According to him, the discount rate in Azerbaijan is expected to start affecting deposit interest from next year.
"Currently, there is quite a lot of liquidity in the market. Time is needed for its sterilization. CBA interest rates do not work in conditions of high liquidity. We have to maintain the volume of money at a level where its value is within the corridor planned by the CBA. Strong coordination of monetary and fiscal policy is needed to manage liquidity in the market. This is important and we are working hard on it. We have good coordination with the Ministry of Finance of Azerbaijan. I believe that the discount rate will start to influence the deposit segment from next year," he added.
The Central Bank of Azerbaijan (CBA) also forecasts economic growth in the country this year at the level of 3-3.5 percent and in 2025 - 3-4 percent.
Fitch Solutions company also shared its forecast on economic growth this week. According to their forecast, Azerbaijan's economy will grow by 2.6 percent in 2024 compared to the forecast of annual growth of 2.4 percent in 2023.
Visa is actively working on the next stage of development of the international payments system in Azerbaijan, Vice President and Regional Manager of Visa in Central Asia and Azerbaijan Cristina Doros told Trend in an exclusive interview.
"The B2B Connect project has become significant for the country as it was the first launch in the regions of Central and Eastern Europe, Middle East and Africa. The experience of Kapital Bank, which launched the product first, turned out to be very interesting for the rest of the participants of the Azerbaijani banking system. At present, we already have seven banks in Azerbaijan alone that have launched this platform, and more banks are working on it. In addition to the existing payment solutions, we are actively working on the next stage of development of the international payment system," she said.
This week State Insurance Commercial Company Azersigorta was abolished and in connection with this the company portfolio of Azersigorta OJSC will be transferred to another company, Trend reports via Azersigorta.
"The portfolio of Azersıgorta OJSC will be transferred to another company, but what kind of insurance company it will be is unknown, as there is no official confirming document yet. The name of the company will be announced based on the decision of the Cabinet of Ministers and Azerbaijan Investment Holding," the company informed.
This week Azerbaijan and the Islamic Development Bank (IsDB) signed a memorandum of understanding to prepare a framework program of country cooperation. Execution of the document will contribute to the activation of joint activities aimed at cooperation between the parties and promotion of the socio-economic development goals of the countries.
To note, Azerbaijan and the World Bank (WB) discussed priority tasks for the country's economic development. During the discussions, WB manager in Azerbaijan Stefanie Stallmeister stressed that the international organization she represents attaches great importance to cooperation with Azerbaijan, the WB will continue its support to achieve the country's development priorities.
In addition, this week the European Bank for Reconstruction and Development (EBRD) granted a loan of $42 million (€38.71 million) to Azerbaijan Caspian Shipping Company CJSC (ASCO). ASCO will use the funds to expand its merchant fleet operations by acquiring two Handysize vessels to transport dry cargo in international waters, which will improve regional maritime connectivity and trade.
The Asian Development Bank (ADB) also made a new bond placement in Azerbaijan's local currency this week and raised 19.5 million manat (about $11.5 million).
According to ADB, the issuance is structured as a three-year currency-linked bond with an amortization fund that reflects the terms of the amortization of the underlying loan aimed at financing the development of women's entrepreneurship and agribusiness in Azerbaijan.
Meanwhile, the bond is denominated in Azerbaijani manats, but settlements are made in US dollars, which makes it easier to attract international investors.
The coupon rate is 6.5 percent per year and is quoted on the Luxembourg Stock Exchange.
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