Vusal Gasimli: No grounds for concern about manat exchange rate

13:26 - 3.03.2020


March 3, Fineko/abc.az. Azerbaijan has established immunity even against the threshold below $30 per barrel.

ABC.AZ reports that the above-said statement was made by Vusal Gasimli, Executive Director of the Center for Analysis of Economic Reforms & Communications, when commenting on the macroeconomic impact of the decline in oil prices in Azerbaijan.

Gasimli said that the change in the oil price by $1 per barrel affects our current operations by about $250 million a year.

According to Gasimli, Azerbaijan is immune even against the threshold below $30 per barrel: "Moreover, in 2015 oil prices fell more than three times. Currently, such a sharp decline is not possible. Moreover, the government, business and the population are more prepared from an institutional and psychological angle for oil price hikes. In this case, I will say that we can maintain the current account balance even at the oil price of $40-45.

This also indicates that there are no serious inflation threats and concerns about the manat exchange rate. In the State Budget each barrel of oil is calculated at $55. In accordance with the budget rules, the upper limit of expenditures is determined in the consolidated budget. The upper limit is calculated on the basis of spent oil revenues of the consolidated budget, non-oil revenues of the consolidated budget, and other revenues to the consolidated budget. And spent oil revenues are determined by no more than 30% of net financial assets. Thus, the "Golden rules" of the budget ensure fiscal stability. The simple explanation for the budget rules is that when oil prices are higher than forecast, our strategic foreign exchange reserves increase, otherwise we finance our spending with reserves. In a way, budget rules smooth out fiscal policy."

By Elmir Murad

 

 

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