Azerbaijan’s Central Bank announces decision on discount, interest rates
The Central Bank of Azerbaijan (CBA) said in its report that it has kept the discount rate at the level of 15 percent.
The decision was made during the meeting of the bank’s board.
The CBA board also decided to keep the lower limit of the interest rate corridor unchanged at 10 percent, and the upper limit at 18 percent.
The CBA’s decision is explained by economic activity and continuing growth of Azerbaijan’s non-oil sector (2.5 percent growth in the first nine months of 2017), consumer confidence, expansion of export and import substitution processes, growth in oil prices, strengthening of the Azerbaijani manat’s exchange rate by four percent since the beginning of the year, monetary conditions and inflationary processes.
The report noted that the CBA is observing positive dynamics in the non-oil sector of Azerbaijan’s economy, and macroeconomic stabilization plays a special role in formation of such dynamics.
The CBA stressed that analysis of medium- and short-term factors that affect price stability shows that there is no need to correct the monetary policy.
The next meeting of the CBA, at which it is planned to discuss the discount rate again, will be held on February 15, 2018.
Azerbaijan forecasts growth of its non-oil industry by 2022
Azerbaijan’s non-oil industry will annually grow by 7.3 percent in 2018-2021, Azerbaijani Deputy Minister of Economy Sevinj Hasanova said.
Hasanova made the remarks at a joint meeting of five parliamentary committees dedicated to the discussion of the draft state budget in Baku.
“The volume of the agricultural sector will increase by 6.2 percent in 2018,” she added. “On average, over the next three years, the volume of the country’s agricultural sector will grow by 6 percent annually.”
"The volume of the tourism sector will increase by 6.6 percent in 2018, while over the next 3 years, the average growth is projected to be more than 6 percent," she said. “In total, the flow of tourists to Azerbaijan has increased due to the work carried out in the tourism sector.”
“The creation of modern infrastructure must contribute to the further development of the tourism sector,” Hasanova said, adding that a lot of international events have been recently held in the country.
High discount rate not to have big impact on Azerbaijani banks
The preservation of a high interest rate at 15 percent will not have a big impact on Azerbaijani banks, Zakir Nuriyev, head of the Azerbaijan Banks Association, told Trend.
"Today the situation in the Azerbaijani banking market is gradually stabilizing,” he said. “So I think that the preservation of the discount rate at 15 percent will not have a big impact on the banking sector."
Nuriyev added that the discount rate depends on the current macroeconomic processes in the country.
"The Central Bank of Azerbaijan (CBA) makes a decision to change or keep the discount rate, taking into account the macroeconomic situation and indicators in the country," he said. “The CBA is likely to think that at present, the situation is not rather favorable for reducing the discount rate. But I would like to stress that in fact there are tendencies for reducing the discount rate on the market.”
A decision was made to keep the discount rate at the level of 15 percent at another meeting of the CBA board.
The CBA explains its decision to keep the discount rate at the previous level by mentioning some factors.
Among those factors are economic activity and the continuing growth of the non-oil sector (by 2.5 percent in January-September 2017), an increase in consumer confidence, export expansion and expansion of import substitution processes, an increase in oil prices, an increase in the manat exchange rate by 4 percent since early 2017, monetary conditions and inflationary processes.
WB, Azerbaijan mull problems of banking sector
The reforms conducted in Azerbaijan created an opportunity for the country’s banking sector to exit the crisis, said Vusal Gasimli, executive director of the Center for Analysis of Economic Reforms and Communication.
He made the remarks during a roundtable meeting with the World Bank, said the сenter in a message.
Gasimli said the financial and banking sector should play a more important role in the diversification and long-term development of the country's economy, as well as in protecting macroeconomic stability.
Head of Azerbaijan Banks Association Zakir Nuriyev, who also took part in the event, told Trend that the WB representatives shared international experience in resolving the problems of the banking sector.
“Сhanging the rules and legislation was touched upon and a number of possible solutions were suggested,” said Nuriyev, adding that it is up to the Azerbaijani side whether to accept these proposals or not.