Weekly economic review (Mar. 16-20)
The change of the rate of manat in Azerbaijan will have positive effects from the point of view of preserving the stability of the balance of payments and balancing the budget expenditures and revenues, chief economist of the European Bank for Reconstruction and Development (EBRD) Dmitry Gvindadze said.
He said that it will also help to keep the level of reserves of the State Oil Fund of Azerbaijan at a sufficiently high level.
However, Gvindadze said that the banking sector is likely to reconsider the risks, which is normal given the fact that the manat has depreciated by almost 34 percent.
If Azerbaijan did not adjust the rate of manat, the country would have found itself in a difficult situation, according to the economist.
"Practically all the national currencies of the countries of the region devalued," he said. "The Russian currency has fallen in price nearly up to 50 percent, the Ukrainian one lost nearly two-thirds of its value. This happened due to the new regional economic realities. Against this background, when the currencies of major trading partners have devalued, it is very difficult to keep the exchange rate at the same crisis level. Therefore, the adjustment of the manat is a logical decision."
On February 21, Central Bank has established rate of the manat to the US dollar at 1.05 manats per dollar (compared to 0.7844 manats earlier), which corresponds to the cheapening of rate by 33.9 percent. In this case, the official rate of the euro to the manat consolidated by 33.8 percent - up to 1,195 manats.
The EBRD has allocated $ 2.5 billion to finance 146 projects in various sectors of the economy since the beginning of cooperation with Azerbaijan. One of the EBRD's main tasks is to ensure the stable development of Azerbaijan's non-oil sector by investing in small and medium private enterprises.
Azerbaijan is the largest recipient of the EBRD funds in the Caucasus, as well as one of the largest - in the CIS and Eastern Europe.
The EBRD invested 238 million euros in the implementation of 21 projects in Azerbaijan in 2014.
For comparison, the EBRD allocated 163 million euros for the implementation of 17 projects in the country in 2013.