Weekly economic review (May 23-27)
Package of measures developed to ensure Azerbaijani currency's liquidity
The Azerbaijan Banks Association worked out a package of measures for ensuring manat's liquidity and submitted it to the government, Javanshir Abdullayev, director of the Azerbaijan Bank Training Center, said.
"In order to increase the liquidity, first of all, the market should be completely open for foreign investment. This will support the capitalization of banks and attraction of additional liquid assets," he said. "This will also make it possible to increase the confidence in the banking sector. This is one of the right ways to increase liquidity."
Abdullayev added that the second way is related to the assets of the State Oil Fund of Azerbaijan (SOFAZ).
"The Central Bank can't increase the liquidity at once, it can do it gradually alongside with the increase of GDP. But currently, ensuring the growth of GDP and real sector of the country's economy demands funds," he said.
"Now there is such a dilemma: if the Central Bank starts to print currency and put it on the market, this can put pressure on the currency market. Therefore, we propose to deposit 5 percent of SOFAZ's assets in manats. This won't affect the market," he explained.
"SOFAZ could allocate those funds to the companies that have investment promotion documents or direct them to the spheres that are priority for the government," added Abdullayev.
He said that another way of increasing manat's liquidity is to create a hedge fund so that the banks would be able to convert dollars into manats and direct them to the real sector of the economy.