Elman Rustamov, the chairman of the Managing Board of the National Bank of Azerbaijan (NBA) gave a news conference on 21 April on the results of the first quarter, lightened many serious issues.
He estimated the result of the 1st quarter of 2006 as satisfactory. Azeri Government communicated the IMF its intention to keep one-digit inflation by the totals of 2006 and achieve this goal on practice. Rustamov said NBA-estimated base inflation made 2% in Q1 and consumers inflation made 4.6%. Greater part of base inflation was formed as a result of non-monetary factors (80.7%), due to liberalization of prices for energy carriers, rise of price for sugar and influence to seasonal factors. Low influence of monetary factors was conditioned by 6.7.%-growth of cash mass in reported period.
To keep inflation on certain level, National Bank is continuing a flexible rate policy. The main factor influencing manat rate is rise of oil prices in the world market, though the countrys revenues from oil are accounted as well. 60% of budget incomes today are constituted by currency from oil sales.
The currency inflow resulted in manat rate strengthening by 1.6%. Rustamov considers outstanding the fact of 1.1%-reduction of manat rate relatively to those of Azerbaijans basic foreign partners currencies.
Speaking on future plans Rustamov underlined that the National Bank of Azerbaijan is planning to transfer $100-150mln from its currency reserves to World Banks treasury disposal in Q2. The Banks officials are currently talking to WB and at the same time execute a training program for National banks employees.
This kind of transfer is quite habitual, but WBs proposal is more seductive as the banks actions are accompanied with technical assistance and experts training.
NBA is not going to replace other foreign managers. Reserves grow up alongside the necessity in raising the portfolio, he assured.
There is no need today uniting two or several banking laws into single banking codex, the ruling chairman of the National Bank of Azerbaijan (NBA), according to the senior banker.
The given process won` t increase the effectiveness, rather creating the air of instability in the banking sector, he surmised. Stability of legislature is one of the most important factors in the development of areas it tries to control. Accordingly, changes will not serve the interests of the banking sector development.
Lack of necessity in adopting the Banking codex also comes from the fact that for the last 10 years there have been 3 generations of laws in the banking area- more than in any other sector, he stressed.
The National Bank is now actively participates in the Bazel-P standards discussions with the Bazel committee, however, they were not yet adopted even by the most developed countries, with the far more advanced banking sector. Thus, Azerbaijan may adopt Bazel- P only after it will be installed in other developing countries. This may require introducing some changes in the existing banking legislature in the country (draft law on banks).
Indeed over the past 10 years the banking sector of the country has undergone serious reforms directed at liberalization and institutional building. It is necessary to note capitalization of the banking sector and increase of reliability through clearing it from non-rivalry subjects. Project on mortgage crediting can be called a child of NBA. The painless transition to new manats can be estimated as one more advantage of the NBA.