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Weekly economic review (Jan. 8-12)

Analysis Materials 15 January 2018 17:40 (UTC +04:00)

Bankrupt companies' CEOs won't head credit bureaus in Azerbaijan

CEOs of compulsorily liquidated or bankrupt companies will not be able to head credit bureaus in Azerbaijan, according to the "Procedure for Regulation and Supervision of Activity of Credit Bureaus" approved by the Financial Market Supervisory Authority of Azerbaijan.

The ban is valid for two years after the compulsory liquidation or bankruptcy of a legal entity, according to the document.

The Supervisory Authority assesses activity of the credit bureau, effectiveness of its work, oversees the exchange of information in the bureau and ensuring the inviolability of personal data.

The credit bureau should submit reports to the Supervisory Authority, which, in turn, monitors the bureau's activity. Comprehensive inspections should be conducted at least once every three years.

Thematic inspections take place in case of frequent personnel reshuffles in the management of the credit bureau, a large number of complaints from consumers of services and in other cases.

The authorized capital of credit bureaus should not be less than 2 million manats.

In December last year, Azerbaijan's banking market participants decided to create Azerbaijan Credit Bureau LLC. Chairman of the Board of the International Bank of Azerbaijan Khalid Ahadov was elected Chairman of the Supervisory Board of the Azerbaijan Credit Bureau.

The International Bank of Azerbaijan, Bank Respublika, Xalq Bank, Kapital Bank, PASHA Bank, Rabitabank, Unibank and Ziraat Bank Azerbaijan became the founders of the Azerbaijan Credit Bureau LLC.

The private credit bureau will contain more information than the Centralized Credit Registry and cover a bigger number of borrowers. The bureau will receive information not only from banks, but also from insurance and leasing companies, mobile communication operators, etc.

Azerbaijan, Belarus to co-op in stock market

Azerbaijan and Belarus will cooperate in the stock market, the Baku Stock Exchange (BSE) said in a message.

The corresponding memorandum was signed by Vugar Namazov, head of BSE, and Andrei Aukhimenya, head of Belarusian Currency and Stock Exchange, the message said.

The organizations will exchange experience in the development of listing, study the mutual legal framework for introducing new financial instruments in the markets, and support post-trade institutions for foreign investors to enter the capital markets.

Total turnover of the stock transactions on all instruments on the BSE amounted to over 11.63 billion manats in January-November 2017.

This figure exceeds the total turnover of transactions in the same period of 2016 by 2.2 times.

In January-November 2017, the volume of government securities market totaled 4.97 billion manats (7.2-fold increase over the year), corporate securities market turnover - 1.51 billion manats (3.8-fold growth), and the derivatives market volume -5.16 billion manats (growth by 24.9 percent).

Azerbaijan's non-oil export grow by 24pct in 2017

Azerbaijan's President Ilham Aliyev said that Azerbaijan's non-oil exports grew by 24 percent in 2017.

He made the statement at a meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development of the country in 2017 and future objectives.

The head of state noted that the country's export potential is growing. "In 2017, exports grew by 19 percent and non-oil exports increased by 24 percent. This is the result of the relevant work. The number of population is increasing. The population grows by at least 100,000 people a year. Consumption is increasing, the number of tourists is increasing. Last year, the country received almost 500,000 tourists more than in 2016. This, naturally, increases consumption. Nevertheless, our non-oil exports, including the export of food products, are growing rapidly. The growth of the non-oil sector by 24 percent during the year is the result of the work done," President Aliyev said.

The head of state noted that imports grew by about one percent, and this is natural. "Because, Azerbaijan, first of all, meets its demand at even larger volumes through domestic production, on the other hand, the purchasing power of citizens increases. So, I believe that the preservation of imports at a stable level is our greatest achievement. The positive surplus of trade balance is $6.2 billion. Economists are well aware that this is an excellent indicator. I am confident that the difference will be even greater in this and subsequent years. This is one of the very important factors for improving the macroeconomic situation, and keeping the stable rate of the manat," said Ilham Aliyev.

The President stressed that the major economic indicators are very positive.

"I think that every country can be proud of such results, and we are proud that we accomplished 2017 with such excellent indicators. The development of the regions was constantly in the spotlight. In the past year I visited over 30 regions. As part of these visits new enterprises were opened and foundation of new enterprises was laid, and I was informed about the situation in the regions. I visit the regions every year and I can say that I visited almost half of the regions last year. Of course this is very important for me, since I review the situation on the ground and give relevant instructions.

I know what is important for citizens residing in these regions. Of course, it is also very important for strengthening the discipline, because I have repeatedly visited every region of Azerbaijan and personally supervise the implementation of these instructions," the head of state said.

EIA reveals forecasts for Azerbaijan’s 2018-2019 petroleum output

Azerbaijan is expected to produce 0.79 million barrels of petroleum and other liquids per day in in 2018, the US Energy Information Administration (EIA) said in its January Short-term Energy Outlook (STEO).

EIA estimates that petroleum and other liquids production in Azerbaijan stood at 0.80 million barrels per day in 2017.

The volume of production of petroleum and other liquids in the country is expected to stand at 0.77 million barrels per day in 2019.

The quarterly production in Azerbaijan for 2018 is forecasted as follows: 0.81 million barrels per day in Q1, 0.80 million barrels per day in Q2, 0.78 million barrels per day in Q3 and 0.77 million barrels per day in Q4.

This is while the country is expected to produce 0.78 million barrels of petroleum and other liquids per day in Q1 and Q2 of 2019 each, 0.77 million barrels per day in Q3 and 0.76 million barrels per day in Q4.

The Azeri-Chirag-Gunashli block of offshore fields is giving the major part of the oil produced in Azerbaijan. The Azerbaijani Light oil is produced at that block.

Azerbaijan's proven oil reserves stood at 7 billion barrels as of early 2016, according to BP.

Customs revenues of Azerbaijani budget up 14%

Azerbaijan's State Customs Committee transferred about 2.61 billion manats to the state budget in 2017, 14 percent more than in 2016, reads the Committee's report.

The Committee transferred 225.38 million manats to the budget in December 2017.

Revenues from customs duties amounted to 73.91 million manats, revenues from value added tax (VAT) - 132.85 million manats, revenues from excise duty - 15.67 million manats, and revenues from highway-use tax - 2.95 million manats in December 2017.

Revenues from the customs duties increased by 38 percent, revenues from VAT decreased by 10.5 percent, revenues from the excise tax rose by 2.5 times, and revenues from the highway-use tax decreased by nine times in December 2017 as compared to December 2016.

The forecast on customs revenues of Azerbaijan's state budget was 2.25 billion manats for 2017.

Opening of currency exchanges won’t affect banks’ profits in Azerbaijan - ABA

Opening of currency exchange offices by individuals and legal entities won't affect the profit of banks in Azerbaijan, Zakir Nuriyev, chairman of the country's Banks Association (ABA), told Trend.

He said that the decision to close the currency exchange offices, adopted by Azerbaijan's Financial Market Supervisory Authority (FIMSA) in January 2016, slightly increased the profit of banks, but this increase was observed mainly in the period of some volatility in the market.

"Today the situation in the market is quite stable," Nuriyev said. "Therefore, the profit of banks from currency exchange operations is not so significant."

He added that banks, in addition to cash transactions on currency exchange, also conduct non-cash transactions, this is while currency exchange offices will not be able to provide such services.

"Currency exchange offices outside banks will be able to provide only cash transactions," he said. "Besides, Azerbaijani legislation doesn't imply depriving banks of the right to continue currency exchange operations."

Nuriyev added that the resumption of work of currency exchange offices outside banks will contribute to the development of tourism in Azerbaijan.

This step is aimed at ensuring that the population and guests of the country freely exchange currency on weekends and holidays, he said.

"The majority of banks don't operate on weekends and holidays," he noted. "The number of bank branches and offices that provide services around the clock is also limited. This creates a number of difficulties for both tourists and the population. Therefore, the resumption of work of currency exchange offices will improve the quality of service rendered to the population and tourists."

Under the new order, which entered into force Dec. 30, 2017, the exchange offices are not allowed to provide other services rather than currency exchange services. A special license is required to provide currency exchange services.

The currency exchange offices can operate at a separate kiosk or building, including at railway stations, hotels, ports and airports. Furthermore, in addition to the exchange rate itself, a license (or a copy) for currency exchange operations, the hotline number of the FIMSA for complaints and appeals, as well as the schedule of the currency exchange office operation should be placed on a prominent location.

The sale of currency equivalent to more than $500 or purchase of currency equivalent to more than $10,000 is possible only with the provision of an identity card.

WB improves forecast on Azerbaijan’s economic growth

The World Bank (WB) forecasts the growth of the Azerbaijani economy at the level of 0.9 percent in 2018, according to the updated Global Economic Prospects report.

In its previous report published in June 2017, the bank forecasted that Azerbaijan's GDP will grow by 0.3 percent in 2018, and by 0.2 percent - in 2019.

WB experts expect that the GDP growth of Azerbaijan will be 1.5 percent in 2019 and 2.6 percent - in 2020.

It is noted that the non-oil sector is recovering in Azerbaijan and investments are growing.

The World Bank also improved the forecast on the growth of the world economy from 2.9 to 3.1 percent in 2018.

In 2019, the growth is expected at the level of three percent (previously, the growth was projected to stand at 2.9 percent).

WB analysts think that the increase in investments, industrial production and trade will contribute to the growth.

The bank expects the growth of the world economy to stand at three percent in 2017.

The economy of developed countries is expected to grow by 2.2 percent in 2018 (earlier, the forecast was 1.8 percent) and by 1.9 percent - in 2019 (earlier, 0.9 percent).

The GDP growth forecast for developing countries is expected to stand at 4.5 percent in 2018, and 4.7 percent - in 2019 and 2020.

2018 will be successful year for industrial and agricultural development in Azerbaijan

The year 2018 will be successful in terms of industrial and agricultural development in Azerbaijan, Azerbaijan's President Ilham Aliyev said.

He made the statement at a meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development of the country in 2017 and future objectives.

The Head of State noted that practical steps are being taken to create industrial parks. The president noted that the Neftchala Industrial District was put into operation last year, while Hajigabul, Masalli and Sabirabad industrial sites are under construction.

"Opening of the first plant in the Mingechevir Light Industry Park is expected this year. The work at Sumgait Chemical Industry Park is very successful. Four new enterprises were opened and foundation of three enterprises was laid in late 2017. I am sure that they will be launched this year or early next year. Thus, the number of residents of the Sumgayit Chemical Industry Park has reached 15 and the volume of investment to be invested is $ 2.7 billion, which is a good result, and the $ 2.7 billion investment is a big figure," President Aliyev said.

President Aliyev expressed confidence that 2018 would be a remarkable year for industrial development: "It is planned to open ten new carpet factories, so the number of carpet factories should reach 20 by the end of this year. This means thousands of jobs. Particularly, women are working in these factories. They are nice jobs created for women, where they can show their knowledge and talent, and create good financial opportunities for themselves and for our country. Their products create wonderful opportunities for our country's export potential and promotion of the Azerbaijani carpet in the world. That's why it is planned to open ten new factories this year," he said.

The head of state also expressed his confidence that the year 2018 will be successful for the development of agriculture: "Last year, the agriculture sector increased by 4.1 percent. This is a good indicator. Also, we are dealing with food security issues, and we develop the traditional technical field of agriculture. I have to note that Davos World Economic Forum has made a calculation over the food security, and Azerbaijan is ranked the 57th place in terms of food security index. This is a good indicator. Additional measures will be taken in the field of food security, in particular, grain production, so that to reduce dependence on imports and increase the volume of export-oriented products as in 2017," President Aliyev said.

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