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Economical news
Bulletine Economics 

2017 August 14 ( Tuesday )  17:01:27
Print version
Русский Azərbaycan

Number of Citizens Receiving Targeted Assistance Decreased by 10.7%

Baku / 14.08.17 / Turan: As of July 1, 498.4 thousand people received targeted social assistance in Azerbaijan, the State Statistics Committee reports. This is 5% of the country's population.

In comparison with the beginning of the year, the number of people receiving targeted social assistance decreased by 10.7%.

In total, at the beginning of July this year, 120,300 families were recognized as needy in Azerbaijan. For each member of low-income families, the state pays an average of 35.80 manats per month.

The economist Natig Jafarli believes the government systematically puts the limit of poverty low to bring down its level. "In developed countries, if people spend more than 12% of their incomes on food and 10% on public services, they are ranked among those with low incomes. In Azerbaijan, about half of the population"s money income is spent on food. Thus, only on this parameter not 5%, as official statistics state, but half of the population lives below the poverty limit," the expert notes. -----08D

Import of Cars Increased by 55%

Baku / 14.08.17 / Turan: During January-July of 2017 4,468 vehicles were delivered to Azerbaijan, which is 55% more than in the same period of last year, Turan was told by the State Customs Committee.

For the indicated period, 3,791 cars were purchased abroad, which is 1,334 units more than in the seven months of 2016. 519 trucks (+219 units) and 111 buses and minibuses (+67 units) were also imported.

The car market is reviving after the crisis of 2016. The closing of car dealer salons is suspended, and even opening of new car dealer salons is observed. Companies, taking into account the needs, import not only new, but also used cars. -----08D

Azerbaijan Reaches Level of 1995, According to Number of Employees for Hire

Baku / 14.08.17 / Turan: In June, one of the indicators of growth in business activity - the number of employees for hire - showed positive dynamics. According to the State Statistics Committee (SSC), in June the number of people employed for hire grew by 2.5 thousand.

As of July 1, 1 million 527.7 thousand people worked in the economy for hire. This is the highest rate since 1995, when the number of employees for hire was 1 million 572 thousand.

It is noteworthy that the dynamics in the labor market has declined since 2014, when the number of employees for hire, according to the SSC, was 1 million 519.7 thousand.

In June, the number of employees in the public sector decreased from 886.4 thousand to 881.1 thousand. In the non-public sector, 7,800 people were hired for a month. -------08D

Revenues from International Mobile Services Fall Threefold

Baku / 14.08.17 / Turan: The profit of local communications in the segment of international telephone conversations decreased threefold from 2012 to 2016. So, whereas in 2012 the revenues of this sphere amounted to 160 million manats, in 2016 the mentioned figure fell to 53 million manats.

"Apparently, the main reason for the drop in revenues from international telephone services is the widespread use of text, voice and video communications via the Internet, as well as calls using programs such as WhatsApp and Skype," the economist Rovshan Agayev said. So, for the last two years the total turnover of mobile communication has decreased by 100 million manats. So, while in 2014 this indicator was at the level of 915 million manats, last year it was 825 million manats.

Mobile operators are losing their profits due to the increasing popularity of Skype, Telegram, Viber and Whatsapp, the expert notes, as people are increasingly using the services listed above rather than SMS messages, as this is more profitable. -0 ---

CBA Attracts 100 Million Manats from Banks at New Deposit Auction

Baku / 14.08.17 / Turan: The Central Bank of Azerbaijan (CBA) has raised another 100 million manats from banks within the framework of the next deposit auction, the main bank of the country reported.

According to the CBA, during the deposit auction held on August 14, the supply from banks significantly exceeded the demand and was at the level of 444.7 million manats. The weighted average interest rate on deposit transactions was 10.01%, the regulator said. The funds were raised for a period of 14 days.

The CBA began conducting deposit auctions in June 2016 to sterilize the money supply, i.e. withdraw money from the economy to avoid devaluation and inflationary processes. So, since early 2017, the cash flow regulator has attracted over 6.3 billion manats from deposit auctions with aggregate demand exceeding 13.6 billion manats. For comparison, with the beginning of the auctions, the money supply in circulation decreased for the year from 13.6 billion manats (01.03. 2015) to 8.7 billion manats (01.03.2016).

To date, the monetary base in the country exceeds 8.3 billion manats. However, according to independent analysts of Turan, for the normal functioning of the economy this figure should be at least 40% of Azerbaijan's GDP, or about 20 billion manats. -0--

AZN Continues to Become Cheaper to EUR, Maintaining Stability to USD

Baku / 14. 08.17 / Turan: The Central Bank of Azerbaijan (CBA) kept the official rate of the manat to the dollar at 1.7007 manats / $ 1 on August 14, the CBA said. Meanwhile, the official rate of the manat to the euro on August 14 was at the level of 2.0095 manats / 1EUR (on August 11 - 2.0025 manats / 1EUR). The rate of AZN to the Russian ruble was 0.0284 manats / 1RUB (August 11 - 0.0283 manat / 1RUB).

As can be seen from the latest data, AZN continues to fall in price to the euro area currency, while maintaining relative stability against the dollar. "For the first time in two years on the world market, the euro / dollar exchange rate has grown to 1.8. Only after April, the euro appreciated to the US currency by 11%. At the same time, the growth of the European currency against the dollar occurs in the context of improving the economic indicators of the euro zone, as well as attempts to increase exports from the US. Thus, the dollar loses its positions not only to the euro, but also to other leading currencies. In the second half of this year, the leading countries of the euro zone, including Spain, will finalize the upcoming optimistic currency situation for them. Among the major European economies, Spain showed the most impressive result in April-June - 0.9%. The fourth euro-zone economy has finally surpassed the pre-crisis level (before 2008!) of GDP. The growth of the French economy also accelerated, although very little - from 0.5 to 0.55%. Data for Germany and Italy for the second quarter will appear next week," said Vugar Bayramov, Chairman of the Center for Economic and Social Forecasting, in an interview with Turan.

He also noted that the economy of the zone of the single European currency and the united Europe is developing the fastest in the past six years. So, only in the second quarter of this year, the economy of the euro zone, consisting of 19 European countries, clearly added and reached the pace of development in 2011. In the second quarter, these rates increased by 0.1% to 0.6% from 0.5% in the first three months of the year. The growth indicators allowed increasing the forecast for the growth of the euro area economy in terms of the year from 1.9 to 2.1%. Such a high growth was not observed from the second quarter of 2011. For the entire EU, GDP growth in the second quarter also amounted to 0.6%. This is 2.2% higher than it was after the second quarter in 2016.

"Meanwhile, the manat continued to fall towards the dollar. And while in April of this year the exchange rate of the national currency to the euro zone monetary unit was officially set by the Central Bank at 1.80 manats, now the value of the euro is more than two manats. This suggests that only in the past four months, the manat has fallen to the euro by 10%. Thus, despite the stability of the rate of the Azerbaijani currency to the dollar, having strengthened to the US currency, the euro rate increased to the manat. Any processes occurring in the foreign exchange market affect manat and it should be tied, not to one, but at least to a three-currency basket," Bayramov said.

Recall that in February 2015, the CBA abolished the rigid binding of the exchange rate of the manat to the dollar, tying the rate of the national currency to the bi-currency basket from the dollar and euro. -0 ---

Companies Did Not Raise Funds from Capital Market in July

Baku / 14.08.17 / Turan: In July of this year, the Baku Stock Exchange did not note the attraction of capital through the placement of securities. This is stated in the report of the stock exchange for a seven-month period.

In January-July this year, the volume of the primary share market on BSE amounted to 649.1 million manats, of which 600 million manats is the amount paid by the state for the purchase of shares of the International Bank of Azerbaijan.

The secondary market rose in July due to the purchase and sale of shares of OJSC Rabita Bank for a total of over 17 million manats. In just seven months, the turnover of shares in the secondary market segment amounted to 18.5 million manats, which is 11 times higher than the figure for the same period in 2016.

In July, the Ministry of Finance attracted 52.2 million manats in the market for placement of bonds. In total this year on the exchange, state bonds were bought up to AZN 353.5 million. This is 153 million manats more than in January-July last year.

Last month, the Central Bank of Azerbaijan implemented a record volume of notes. The CBA raised funds from commercial banks to the amount of 446.5 million manats. In total, since the beginning of the year, the volume of placement of notes amounted to 1 billion 222.7 million manats.

The turnover of state and corporate debt securities this year amounted to 470.4 million manats, which is 11 times more than for the same period in 2016. The growth is mainly due to placement of mortgage bonds for AZN 150.5 million, their secondary turnover, as well as operations on purchase and sale of SOCAR bonds. This year the placement of corporate bonds has not yet been noted. -----08D

Devaluation Expectations

"The manat rate can fall by the end of the year," expert says

Baku / 14.08.17 / Turan: In financial circles, it is expected that the manat will be devalued already in the fourth quarter of this year, because at that time, traditionally there is an increase in budget expenditures.

However, the opinions of the players of this market and financial experts on the prospects of the national currency often differ, and other financiers predict the stability of the manat (plus - minus 5%) by the end of this year, believing that devaluation will cost the government more than the costs associated with a stable exchange rate.

"Devaluation will cost the country more than maintaining the exchange rate at the level of 1.7 manats per dollar, since the cost of oil is at $ 50 per barrel, there is a good trade balance, and due to the second stage of development of the Shah Deniz field, gas exports will double. Available reserves also allow us to hope for stability of the exchange rate. In case of devaluation, the banking system will again require infusions, inflation and other undesirable processes will begin. Thus, maintaining the exchange rate is much less costly," one of the top managers of a private financial institution that asked to remain anonymous told Turan IA.

However, this view of the situation, incidentally, overlapping with the position of international rating agencies, can be called an exception, since devaluation expectations in the local financial environment are growing. Experts expect the fall of the manat by the end of this year, in view of the fact that budget expenditures are growing for this period.

"Since the exchange rate remains the result of artificial intervention, rather than the market, by the compression of the money supply or currency intervention for a while you can achieve anything, and therefore you can only speak in the long term, predicting the behavior of the national currency for at least a year. In this case, the recommendation is unchanged: in our currency market, citizens had better not play, long-term reserves should be kept in foreign currency, and short-term ones should be kept in manats. But for some reason people are being tempted into playing currency games, there is more talk about the rise of the manat, etc.," the bank expert Akram Hasanov responded to the Agency"s request.

In the opinion of our interlocutor, the financial authorities of the country cannot and will not further inflate the value of the manat, especially, closer to the end of the year, when it is necessary to fill the state budget. Under such conditions, the overvalued manat will not be profitable even for the government. A similar point of view was expressed to Turan by another source in financial circles, who also wished to remain anonymous:

"The end of the year is not far off, and in the fourth quarter budgetary expenditures, as a rule, increase many times compared with previous quarters. Moreover, this difference compared to the third quarter can be significant, reaching 40-50%, because you need to close debts, settle with budget organizations, foreign lenders, etc. Naturally, the question arises if the manat will drop and to what level our currency will fall, of course, provided a stable price of oil, as the fall of oil indices a priori leads to devaluation. So, it"s difficult to answer this question, but one thing is clear: the Central Bank will not be able to constantly support the manat, squeezing the money supply in circulation. The regulator will definitely resort to devaluation - another question is when and how much the manat will decrease," the interlocutor informed us.

By the end of the year, the probability of devaluation will certainly increase, but it is difficult to calculate the rational link of the monetary policy of the Central Bank. Disputes on this topic are sometimes meaningless, since individual employees in the banking system, and even top managers of private financial institutions responsible for managing financial flows, cannot adequately analyze the macroeconomic situation associated with foreign exchange earnings and expenditures, the balance of payments and other circumstances. I will tell you more, the macroeconomic situation does not lend itself to analysis on the basis of an accessible database, since the real state of affairs in the economy and financial sector of Azerbaijan differs from what is written on paper, presented in official data, etc."

A significant area of ​​the shadow, covering illegal financial transactions and cash flows, exerts an excessive pressure on the foreign exchange market, they believe in financial circles. In conditions of instability of the national currency, illegal incomes are transferred to dollars and are exported outside the country. De facto, having no other opportunity to influence the situation, the Central Bank operates within its real possibilities, squeezing the circulating money supply, since it has no other choice. This is evident from the fact that the money supply in circulation decreased in a year from 13.6 billion manats (01.03. 2015) to 8.7 billion manats (01.03.2016). According to the CBA, today the monetary base exceeds 8.3 billion manats. At the same time, according to independent analysts" calculations, for the normal functioning of the economy this indicator should be at least 40% of GDP, which, in our case, is about 20 billion manats.

On the whole, the figures speak of a stable current contraction in the money supply, according to financiers, which aims to prevent other traders from buying currency, in addition to traditional large players, in this market. According to analysts, there is a huge pressure on the market, and if the CBA does not take out the manat supply, in addition to "traditional" buyers, a lot of people will pour in here, provoking dollar growth and inflationary processes. Thus, having no opportunity to influence large players, the regulator squeezes the manat in circulation, displacing the others.

In general, the financial sources of the Agency are in agreement that such a policy of the CBA is harmful to the economy. According to experts, the Central Bank can release the manat without significant consequences, following the example of neighboring Russia. -0-

Foreign currencies rates fixed by Central Bank

1 ABŞ dollarıUSD1.7007
1 AvroEUR2.0095
1 Avstraliya dollarıAUD1.3419
1 Argentina pesosuARS0.096
1 Belarus rubluBYN0.8753
1 Braziliya rialıBRL0.5327
1 BƏƏ dirhəmiAED0.463
1 Cənubi Afrika randıZAR0.1267
100 Cənubi Korea vonuKRW0.1492
1 Çexiya kronuCZK0.0768
100 Çili pesosuCLP0.2632
1 Çin yuanıCNY0.2553
1 Danimarka kronuDKK0.2702
1 Gürcü larisiGEL0.708
1 Honq Konq dollarıHKD0.2175
1 Hindistan rupisiINR0.0266
1 İngilis funt sterlinqiGBP2.2122
100 İndoneziya rupiasıIDR0.0127
100 İran rialıIRR0.0045
1 İsveç kronuSEK0.2094
1 İsveçrə frankıCHF1.7618
1 İsrail şekeliILS0.4746
1 Kanada dollarıCAD1.341
1 Küveyt dinarıKWD5.6389
1 Qazaxıstan tengəsiKZT0.0051
1 Qırğız somuKGS0.0246
100 Livan funtuLBP0.1128
1 Malayziya rinqqitiMYR0.3963
1 Meksika pesosuMXN0.0955
1 Moldova leyiMDL0.0951
1 Misir funtuEGP0.0957
1 Norveç kronuNOK0.2143
100 Özbək somuUZS0.0412
1 Polşa zlotasıPLN0.4688
1 Rusiya rubluRUB0.0284
1 Sinqapur dollarıSGD1.2496
1 Səudiyyə Ərəbistanı rialıSAR0.4535
1 SDR (BVF-nun xüsusi borcalma hüquqları)SDR2.3983
1 Türk lirəsiTRY0.482
1 Tayvan dollarıTWD0.0561
1 Tacik somonisiTJS0.193
1 Yeni türkmən manatıTMT0.4866
1 Ukrayna qrivnasıUAH0.0663
100 Yapon yeniJPY1.5525
1 Yeni Zelandiya dollarıNZD1.2428