According to IMF, this year’s inflation is projected to reach double digits for the first time in more than 15 years.
“Depreciation of manat has also put pressure on bank balance sheets, because of currency mismatches and unhedged borrowers. Dollarization in the countries in the Caucasus and Central Asia has been high, and has recently increased further amid uncertainty about the future direction of local exchange rates, the Fund reported.
Central banks of these countries are to transfer some of their foreign assets into the local banking system.
“in 2016, the authorities have significantly cut public infrastructure spending, while increasing transfers to vulnerable populations to partially compensate for the adverse impact of devaluation on real incomes”, the Fund said.
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