Financial institutions interested in Azerbaijan’s economy

By: Aynur Jafarova

Azerbaijan’s economy is the most interesting economy across the globe from the standpoint of the development dynamics. That’s why it is now at the center of attention of many financial institutions.

This was announced by Head of the Central Bank of Azerbaijan (CBA) Elman Rustamov at a business forum held with the participation of members of the Caspian European Club (CEIBC) in Baku on October 28.

“They [international finance institutions] show interest in the Azerbaijani phenomenon and the reasons behind its sustainable economic development,” he said.

During the forum, the participants discussed the prospects of sustainable development of the financial-banking sector of Azerbaijan, major trends at global markets and their influence on the development of the banking system of the country.

Rustamov spoke in details about the work of CBA, major aspects of the state policy in the finance-banking field, the development of the banking system, as well as prospects of further development of this sector.

“The state thoroughly monitors the economic policy which is being implemented in the country, in particular in the non-oil sector,” he said.

Rustamov also disclosed major indicators of development in the banking sector.

“The state policy is based on capitalization of oil revenues within the non-oil sector of the economy in the most efficient manner,” he said.

Rustamov went on adding that the falling oil prices in the world markets and sanctions against Russia do not pose a serious threat to the economy of Azerbaijan as the country’s economy is sufficiently resistant to external factors.

“At present, there is an ongoing trend of declining in oil prices,” Rustamov said. “However, the impact of this factor on the economy of the countries is minimal due to the fact that the average price was $103-104 in 2014. Macroeconomic stability in the country, strategic currency reserves in the amount of 74 percent of GDP and the minimum level of public debt create possibilities for maneuvering in such conditions.”

The CBA head also noted the average oil price in 2015 will amount to $99.5, while the price would stand at $90 per barrel in the draft state budget of Azerbaijan for 2015. Fiscal projections for 2014 are formed at a price of $100 per barrel of oil.

Rustamov also said that the impact of Russian sanctions on Azerbaijan is very low.

“Azerbaijan is among the countries which will experience the smallest impact of these sanctions, since the country’s dependence on Russia’s economy is less than 3 percent,” he said.

Later, Rustamov told journalists that the Azerbaijani banks which control about 99 percent of the assets of the banking system will fulfill the requirements of CBA to increase the total capital to 50 million manats by the end of 2014.

“According to forecasts, five or six banks will not be able to fulfill the requirements for capitalization, but the proportion of their assets in the total assets of the banking sector of the country is about one percent, which will not have a strong impact on the banking system of Azerbaijan,” he added.

Touching on the mortgage lending, Rustamov said the issue of adoption of a new strategy to develop the mortgage lending in Azerbaijan needs to be mulled over for a long time.

“The mortgage strategy was presented to the government; it contains a lot of interesting points and developments, and currently, active multilateral discussions are underway,” Rustamov added.


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