"Macroeconomic situation stable in Azerbaijan"

The Central Bank of Azerbaijan has cut the discount rate from 9.75% to 9.25%, chairman of the CBA Elman Rustamov said at a press-conference in Baku.

According to him, there are no prerequisites in Azerbaijan for the growth of the dollar exchange rate against the manat, so the devaluation of manat is currently not the case.

"The macroeconomic situation is stable in Azerbaijan. We have a surplus in the balance of payments," the CBA chairman noted.

He said that last year revenues of the CBA from managing monetary reserves amounted to $115 million. In 2018, Azerbaijan's monetary reserves held by the Central Bank increased by about 300 million manat or 5%, but their growth is not related to purchase of currency by the bank.

Rustamov stressed that the main aim of the last year was reducing inflation. "During the year, we forecast inflation rate to be around 6-7%. However, by the end of 2018, average annual inflation was 2.3%," he noted, stressing that Azerbaijan's macroeconomic situation this year is almost the same as it was in the previous year.

Economic expert Rovshan Ibragimov, speaking with Vestnik Kavkaza, noted that the CBA is cutting rates in an unprecedented way, which indicates a substantial stabilization of Azerbaijani macroeconomic indicators. "The CBA is lowering interest rates gradually and consistently. Traditionally, Azerbaijan's key rate was quite high, its further decline indicates a recovery of the entire financial system of the republic. This was primarily due to the fact that it was possible to restore stability in the financial market in 2016-2018. Azerbaijan currently has decent reserves, including the Central Bank's reserves of $5.5 billion by the end of 2018, while the republic has $45 billion in reserves," he said in the first place.

"In addition, the manat has stabilized against key currencies, it has been stable against the dollar for about two years ($1 = 1.7 manat). The stability of the exchange rate to the dollar is a traditional policy of the Central Bank, and it was restored after two devaluations in 2015. In this regard, in order to provide the non-oil economic sector with cheaper money, the decision was made to lower the key rate. I think the process is not over yet, since the CBA rate remains high compared to 2.3% inflation last year this year's forecast. But still we haven’t had such a low key rate since Azerbaijan’s independence," Rovshan Ibrahimov said.