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CBA: Surplus is expected to remain in Azerbaijanâ€™s BoP during mid-term perspective

25 December 2013 15:15 (UTC +04:00)

Statement of Central Bank of Azerbaijan on key targets of monetary and financial stability policy for 2014 reported.

According to statement, surplus of BoP will be a main macroeconomic factor influencing exchange rate of manat. Targets such as competitiveness of non-oil sector and protection of financial stability will be taken into account while conducting exchange rate policy. For remaining real effective exchange rate in the useful level, the CBA will try the inflation to be lower than partner countries.

CBA has developed scenarios on application of monetary policy in some versions. In case of risk that price rise exceed forecast in the next year, necessary anti-inflation measures will be taken. If existing inflation will be lower than forecast or risk occurs for economic growth in non-oil sector, opportunities for softening of monetary policy will be kept on the focus of attention.

Generally, single-digit low inflation for 2014 is an acceptable target of macroeconomic policy. Taking this into account, the CBA will provide support to the government for fulfillment of forecasts through monetary policy. For this purpose, CBA will try to influence base inflation with its regulatory instruments. Tariff and prices regulated by the state, demand factors of the inflation, price dynamic in the world market, as well as price level in the partner countries and exchanges rates are factors to influence inflation in 2014.

In the mid-term period and 2014, surplus is expected to remain in Azerbaijan’s BoP. According to CBA forecasts, significant surplus is expected in BoP (15% of GDP) and currency stocks will increase.

According to forecasts, economic growth rate in Azerbaijan in 2014 will make 5.2% and exceed average growth rate in the CIS and world by 2-2.5 percentage points. Two-digit growth is expected in non-oil sector next year. State investments will play an important role in formation of domestic investments. Increase of employment, real personal income and consumer lending will support positive dynamic of the consumption demand.

Generally, the CBA will try to effectively balance monetary policy between economic growth and price stability.