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Elman Rustamov: â€œAzerbaijan is pursuing a responsible macroeconomic policyâ€

27 January 2015 12:21 (UTC +04:00)

Baku - APA-Economics. “Irresponsible, populist policy pursued by several economic powers caused global crisis” said the Chairman of the Central Bank of Azerbaijan Elman Rustamov.

According to him, financial crisis arisen in the US as a mortgage crisis has changed to global cyclic structure crisis in a short run: “It has many, including political aspects. World’s economic powers (US and EU countries) have pursued irresponsible, populist policy. Both budgetary and monetary policy was directed to increase of external borrowing. Consequently, debt load of state, population and large corporations exceeded limit. For instance, total debt load of the developing counties makes 107% of their GDP. This index is 97% in the US, 96% in Eurozone, 250% in Japan. This is called as irresponsible macroeconomic policy in the economic literature”.

Rustamov said that if we have a look at the macroeconomic policy conducted during past 20 years, we’ll see that both Heydar Aliyev and Ilham Aliyev have approached the external debt issue sensitively: “We have $70 bln reserves, external debt makes 8% of GDP. If we go back to the above-mentioned question, the issue of debt had to be burst and it burst. Its first signal appeared with the US mortgage crisis. This process revealed weaknesses of global economy”.

He noted that regulation of this process will take too long: “According to IMF forecasts, global commodity indices fell 30% during past 7 years. Moreover, food price descended 6%, metal price – 17%”.

Rustamov added that decrease of demand caused decline of economic growth rate of the US, Chine and other economic powers.

Noting Azerbaijan has never conducted populist policy, CB Chairman said that Azerbaijan uses oil incomes rationally: “International financial organizations were holding discussions when the oil prices are gained and they were recommending to us that these incomes should be spent correctly, diversified in the foreign markets, saved for future generations and etc. In that time, President chose a good strategy and noted that of course, funds also should be saved for future generations, but they must see beautiful infrastructure, developed country, modern economy. We achieved current situation of the country using most of these funds, saved remaining part for protection of macro stability”.

Touching upon oil price decline in the world market, Rustamov noted that Azerbaijan has created a “financial cushion” when the oil price was high: “Significant of this financial cushion is that the country can regulate the macroeconomic stability, expenditures when the oil price declines. We have sufficient manoeuvre opportunities. These opportunities will help us to fulfil the obligations of current year”.

Along with this, Rustamov said that oil price decline is related to both demand and supply factors.

Speaking about his forecasts on oil price, Rustamov said basing on calculations of the leading international financial institutions that the oil price will make $40-60 a barrel.

“Azerbaijan’s economy has been developing since the global crisis emerged in 2008. As every year, the objectives for 2015 are much greater. Undoubtedly, Azerbaijan will achieve its goals on economic development and macroeconomic stability”.