BAKU, Azerbaijan, October 1.The Central Bank of Azerbaijan has held a presentation of the report on financial stability for the first half of 2024, Trend reports.
Director General of the Central Bank of Azerbaijan Shahin Mahmudzade stated that the macroeconomic situation in Azerbaijan demonstrates positive trends.
“The global macroeconomic environment is shaped by a number of factors, including ongoing geopolitical tensions, expectations of interest rate cuts in Europe and the US, and a slowdown in global growth in commodity and raw material prices. With weakening global demand, there is an increase in inflation risks, which requires additional attention to stability issues. Against the background of these external challenges, the internal macroeconomic situation in Azerbaijan demonstrates positive trends. The country's economy continues to grow at the expense of the non-oil sector, and the real effective exchange rate of the national currency remains stable. Increasing employment and income of the population also contribute to strengthening financial sustainability. The positive balance of foreign trade and growth of strategic foreign exchange reserves create an additional margin of safety,” he said.
According to him, the country's authorities pay special attention to improving the welfare of citizens.
“The government and the Central Bank are taking measures to support economic growth through budgetary and monetary policies aimed at ensuring the sustainability of the economy,” Mahmudzade added.
He noted that in the first half of this year, the sustainability of Azerbaijan's financial sector was further strengthened.
“In the reporting period, the banking sector continued to maintain its dominant role, occupying 94.6 percent of the country's total financial sector,” Mahmudzade emphasized.
He also stated that Azerbaijan continues to improve the legal and regulatory framework in the banking sector.
“Firstly, the rules for conducting transactions with persons related to banks have been updated. The purpose of the changes is to ensure safer and more transparent conditions for performing transactions, reduce risks, and improve the stability of the banking system. Second, changes have been made to the credit risk management procedure. This concerns the expansion of life insurance conditions for consumer loans, as well as strengthening control over the risks associated with the provision of loans,” the director general emphasized.
He noted that the third important step was the adoption of requirements for information security in banking and non-banking credit organizations.
“The innovations are aimed at strengthening data protection and minimizing cybersecurity threats. Finally, a document on the implementation of sustainable finance principles was approved. It is aimed at integrating sustainable development strategies into banks' corporate governance, increasing transparency in accounting and reporting, as well as effective risk management,” he added.
Mahmudzade informed that financial sanctions totaling 135,609 manat ($79,7) were applied in Azerbaijan in the first half of the current year.
“In the first half of the current year, 18 inspections and 47 control measures were carried out in the financial sector. As a result of recorded violations, financial sanctions totaling 135,609 manat ($79,7) were applied. In addition, tough measures were taken against 37 entities, which included revocation of licenses, suspension of their validity, or imposing restrictions on their activities,” he stressed.
