Javanshir Abdullayev: If the banking sector will not be assisted, devaluation is inevitable

It was proposed to increase interest rates on manat deposits in Azerbaijan

Baku. 25 February. REPORT.AZ/ Share resources of the Central Bank of Azerbaijan Republic (CBAR) to the total reserves of the country's commercial banks does not exceed 10%. In Europe this figure is 30-50%. 

Report informs, Director of the Azerbaijan Bank Training Center (ABTC) Javanshir Abdullayev said: "Therefore, changing the discount rate in Azerbaijan does not affect the market."

"The main purpose of raising interest rates is to reduce the difference between the refinancing rate of the Central Bank and the yield manat bonds. So, if the CBAR is to allocate banks cheap loans, banks will start to attract funds from the CBAR. However, the increase of the discount rate is used to attract the banks of manat deposits. This can be achieved only by raising deposit interest rates. People will be able to take the risk only in case of a high yield", said J.Abdullayev.

According to the head of ABTC, despite uncertainty as to the approval of the bill on full insurance of deposits and an increase in the amount of compensation, there is some increase in interest in manat deposits. According to the CBAR report, only in January deposits placed in the amount of 50 mln. AZN. Along with this, Association of Banks has introduced proposals to Azerbaijan Deposit Insurance Fund to increase the interest rates on insured manat deposits.

J.Abdullayev said that in case of filling the state budget and non-availability of problems with the new tax revenues, no devaluation is expected: "If the banking sector will not be assisted, the devaluation is inevitable, because the banks will cease to allocate credits to entrepreneurs, which will lead to a reduction in tax revenues."

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