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Economical news
Bulletine Economics 

2017 October 27 ( Friday )  17:25:15
Print version
Русский Azərbaycan


European Commission and Government of Azerbaijan Sign Financial Agreement

Baku / 27.10.17 / Turan: The Azerbaijani government and the European Commission signed an agreement on financing the Program of the Technical Cooperation Mechanism in Baku on October 25. This document, worth EUR 13.45 million, is part of the Action Program for Azerbaijan for 2016 within the framework of the European Neighborhood Instrument.

According to the press service of the Ministry of Economy, the document from the Azerbaijani side was signed by the head of this department Shaheen Mustafayev.

The agreement provides for "supporting ongoing reforms in the sphere of economy, finance and judicial administration," the Ministry of Economy said in a brief statement. Within the framework of this program, measures will be implemented to develop small and medium-sized businesses, manage public finances, study the labor market, modernize the system of state standards and develop state statistics, and provide legal assistance to the population. ----08D

President Allocates AZN 15 Million to Provide Consumers with Water Meters

Baku / 27.10.17 / Turan: President Ilham Aliyev signed an order to allocate AZN 15 million for the provision of population with water measuring devices.

In March 2016, the head of state allocated 12 million manat also from the state budget to the monopolist of water supply for all consumption groups for the same purposes. JSC Azersu bought and installed for the citizens 50,000 electronic and mechanical meters for these funds. In the course of the trial conducted at the lawsuit of Turan News Agency against Azersu OJSC it was found out that more than half of these funds were spent on installation of water meters. This confirms a high likelihood of corruption in this operation. However, this fact was not investigated in law enforcement agencies.

According to Azersu OJSC, as of January 1 of this year, only 66.9% of the population was provided with water measuring devices. -----08D--

Business Forum of Eastern Partnership Held in Tallinn

Baku / 27.10.17 / Turan: The 4th Eastern Partnership Business Forum on Digital Economy: An Innovative Platform for Transparent Business without Borders is held in Tallinn.

The patron of the three-day forum is the President of Estonia, Kersti Kaliulaid. It is attended by the EU Commissioner for European Neighbourhood Policy and Expansion, Johannes Han and other high-level participants.

As a traditional parallel event of the EU Summit, the business forum has been organized within the framework of the Estonian Presidency of the EU by the Estonian Centre for Eastern Partnership and Enterprise Estonia. The main goal of the forum is to strengthen international economic ties, transparency and new business opportunities, as well as cooperation between the EU and the Eastern Partnership countries, with a special focus on SMEs.

The main topic of the forum is Digital Society and Innovation, which includes such issues as the revision of the management process, the transformation of everyday life and business in all sectors, the creation of a framework for a transparent economy without borders, and the promotion of economic growth, integration and international trade.

More than 400 experts from the European Union, as well as Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine participate in the forum. -0--

Sell Oil, Buy Meat and Butter

Baku / 27.10.17 / Turan: This year Azerbaijan doubled import of meat and other food products. According to the State Customs Committee, in the first nine months of this year, food products worth 971.8 million manat were imported into the country. In this segment of trade, in nominal terms, growth was recorded in the annual comparison at 2.3%.

During the reporting period, meat imports increased by 91.57% to $ 46.552 million, milk - by 69.02% to $ 9.720 million, butter and other dairy products - by 27.65% to $ 49.065 million, tea - by 29.89% to 39.236 million dollars, and fruits and vegetables - by 0.22% to 91.465 million dollars. At the same time, wheat imports decreased by 34.57% to 136.361 million dollars, and sugar - by 5.96% to 124.467 million dollars.

The data cited clearly demonstrate the difficult situation in the domestic agrarian sector announced by President Ilham Aliyev as a priority direction of the non-oil sector. Judging by the statistics, it has not become the dominant component of the economy. Import dependence on the basic parameters of food is steadily increasing, as are the prices of basic necessities.

The reasons for the rise in price of food products, both imported and locally produced, are the topic of a separate study. The question is urgent, why the agrarian sector did not reach the declared rates of food production, despite a solid investment? Why is our trade so dependent on imports of meat, milk, cheese, sour cream, etc? Where are the modern livestock complexes that are shown to the people on AzTV daily?

"The fact is that the priorities in the structure of agricultural exports have changed, and this has led to the fact that the technical crops are now planted in huge areas. It is cotton, grapes, tobacco, and hazelnut gardens. Until recently, there were pastures in these territories, where farmers grazed cattle. Moreover, the fodder base for cows and sheep has also declined. Where can I get hay if the land is planted with vineyards and cotton? Today in the regions of the country, farmers are forced to buy one bale of hay to feed livestock for 4 manat instead of 1.2 manat as it was the year before last. All these factors made the business in livestock production unprofitable," the independent economist Natig Jafarli said.

There is a curtailment of the livestock development program in favor of increasing the production of cotton, creating new cotton plantations, as Agriculture Minister Heydar Asadov recently said. By the way, the Ministry of Agriculture ignored the recent appeal of the farmers of the Sabirabad region, who complained that the local authorities forced them to plant cotton, although there is no irrigation system in these areas. As a result, this territory has come to be unsuitable for grazing livestock, and cotton harvest is also under big question.

According to Jafarli, the situation in the agrarian sphere is aggravated not only by the unintelligent tactics of sowing areas, or red tape, but also by the insufficiency of loans for entrepreneurs, the inaccessibility of modern technologies, and the authorities" inertness in attracting foreign investors to this sector. Interest rates on loans in banks are quite high, which frightens off farmers. In order to raise the agrarian sector, it is necessary to invest billions of manat in this industry. Under current conditions, the government does not undertake such expenses, counting on the enterprise of the villagers.

"The development of agriculture in Azerbaijan is hampered by three problems: lack of fertile land, lack of finance, and lack of a clear food supply program. And until they are resolved, the country will remain import-dependent. Monitoring of the market showed that 50% of food production in the local market is imported. Attempts by the government to increase the production of local products and establish import substitution have not yet produced the desired effect," the expert on agrarian economy Vahid Maharramov said.

As the specialist noted, to normalize the situation, it is necessary to attract investors to the country, but for this it is necessary to liberalize the legislative base, reduce tax rates, and improve the business climate. Otherwise, the agrarian sector will not be able to become a full-fledged alternative to the oil and gas industry and to compensate for the current decline in the economy. -0-

Decline in AZN Rate Promotes Export Growth - Financial Stability Board

Baku / 27.10.17 / Turan: Decreasing the real effective rate of AZN encourages the growth of non-oil exports. This was announced at a meeting of the Financial Stability Council (FSC) on October 26, chaired by Prime Minister Arthur Rasizadeh.

At the meeting, the report prepared by the FSC Secretariat on the work carried out over the past period for medium-term plans was discussed.

It was noted that the balance of payments surplus had been restored, and the strategic currency reserves had increased.

The situation on the foreign exchange market stabilized, and the supply again exceeds the demand for foreign currency. At the same time, the exchange rate of the national currency strengthened. "The real effective rate of AZN for the non-oil sector has fallen by 38% compared to the beginning of 2015, which contributes to the growth of exports and replacement in the domestic import market," the FSC Secretariat said. These and other factors led to a 2.5% increase in non-oil GDP.

The FSC message also recalls the situation in the International Bank of Azerbaijan. The Council positively assesses the progress of the bank"s recovery process at the expense of state support.

FSC was established in July 2016 by decree of the head of state with the aim of ensuring macroeconomic and financial stability. The Council includes an assistant to the President on economic issues and the heads of financial departments.

Independent economists in turn believe that without serious economic and political reforms, a sustainable recovery of the financial system and economic development in the medium and long term will not be possible. And administrative decisions of the issue will not solve the problem radically. -----08D

IBA Announces Profit for Nine Months

Baku / 27.10.17 / Turan: OJSC International Bank of Azerbaijan raised balance profit for the first nine months of 2017 in the amount of 469.9 million manat, according to the balance sheet /balans_hesabati.pdf of the bank.

For the first nine months, IBA obtained about 405 million manat in interest and related incomes. Interest payments of the bank made AZN 131.4 million. In non-interest transactions (AZN 464.5 million), it raised AZN 344.3 million for three quarters.

As of October 1, IBA assets amounted to 7.1 billion manat, of which 2 billion 217.4 million manat is loans given to customers, taking into account the reserves for them. The Central Bank still has deposits of 3 billion 50.9 million manat. In securities, the IBA has invested 268.4 million manat of its assets.

In the IBA at the beginning of October this year, there were funds of banks and other financial institutions for a total of 2 billion 348 million manat. Timed deposits of the population and companies in the IBA are estimated at more than 1 billion manat. Demand deposits of legal entities amount to 2 billion 375.4 million manat, and those of individuals are 437.4 million manat.

According to the report, shareholders" equity of the bank is 319.4 million manat. It should be noted that the paid authorized capital of the IBA exceeds 1.2 billion manat. In other words, the bank did not restore its capital after the loss of solvency in early 2015. The state represented by the Ministry of Finance, the State Property Committee and CJSC Agrarkredit own over 95% of the shares of the IBA. ---08B--

Foreign currencies rates fixed by Central Bank

1 ABŞ dollarıUSD1.7002
1 AvroEUR1.9782
1 Avstraliya dollarıAUD1.299
1 Argentina pesosuARS0.0963
1 Belarus rubluBYN0.8644
1 Braziliya rialıBRL0.5168
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1 Cənubi Afrika randıZAR0.1194
100 Cənubi Korea vonuKRW0.1504
1 Çexiya kronuCZK0.077
100 Çili pesosuCLP0.2678
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100 İran rialıIRR0.0045
1 İsveç kronuSEK0.203
1 İsveçrə frankıCHF1.702
1 İsrail şekeliILS0.482
1 Kanada dollarıCAD1.3211
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1 Meksika pesosuMXN0.0885
1 Moldova leyiMDL0.0986
1 Misir funtuEGP0.0963
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1 Səudiyyə Ərəbistanı rialıSAR0.4534
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