Financial Stability Board: De-dollarization of national economy possible

The Central Bank of Azerbaijan has announced that stabilization in the country’s foreign exchange market had an adequate effect on the national currency, the manat, thus creating a basis for the beginning of the dedollarization of the economy and keeping inflation at an acceptable level.

The issues of macroeconomic and financial stability were discussed during the meeting of the Financial Stability Board under the chairmanship of Prime Minister Artur Rasizade on April 18, the CBA reported.

The meeting was attended by members of the Financial Stability Board: Azerbaijani president’s aide on economic reforms Natig Amirov, Minister of Finance Samir Sharifov, Economy Minister Shahin Mustafayev, Chairman of the Central Bank Elman Rustamov, Chairman of the Financial Market Supervisory Body Rufat Aslanli and Executive Director of the State Oil Fund Shahmar Movsumov.

The meeting participants noted that since January 2017, the monthly inflation began to decline, while the manat strengthened to a certain extent. In addition, the economic growth rate began to recover.

"Since early 2017, the effective tactical coordination of monetary, exchange rate and fiscal policies has been ensured, and a program has been launched to optimize the volume of the money supply. The intensification of sterilization operations conducted by the CBA played a stabilizing role in neutralizing the negative effect of excessive money supply on the currency market and the manat rate, "the CBA said.

The participants further noted that work to improve the framework of fiscal and debt policy has created a favorable macro-fiscal base for strengthening the sustainability of the budget in the medium term. In the first quarter, measures aimed at ensuring macroeconomic and financial stability, including the balance of the currency market, created the basis for making important decisions for the transition to a floating exchange rate.

The stabilizing effect on the foreign exchange market was provided by measures on putting debt obligations, left from past years, beyond the macroeconomic framework, as well as improvement of the currency regime, limiting of imports, and stimulation of exports.

They emphasized the implementation of comprehensive measures to ensure the sustainability of the financial system, measures to improve the International Bank of Azerbaijan and the capitalization of the Azerbaijan Deposit Insurance Fund in the first quarter.

The meeting participants agreed that a policy aimed at ensuring macroeconomic and financial stability should be continued until the end of the year.

The Financial Stability Board was established on July 15, 2016. The CBA exercises the authority of the secretariat of the Council.