World economic crisis affects Azerbaijan

On the one hand, the inflow of oil dollars to the country has dropped. The reduction in oil prices by $10 per barrel reduces receipts to the state oil fund of the country by $2 bln annually. However, through the past months it dropped not by $10 but by over $100, considering the fact that in July the top price of oil was $147 per barrel.

One of the results of this process is a decline in economic activity, significant reduction of the issuance of consumer credits, which led to the decline in the purchasing capacity of the population.

Day.Az reports with reference to ANS-Press that according to chairman of the association "Assistance to economic initiatives" Azer Mehtiyev considers that this is not the end: "On the one hand, the inflow of oil dollars to the country is reducing and on the other hand the economic activeness is declining. The banks are unable to provide consumer credits to the population, resulting in the decline in the purchasing capacity of the population. Moreover, the processes, currently occuring in the real sector throughout the world, including shutdown of enterprises, freezing several projects and growing unemployment, start to occur in Azerbaijan.

In this connection I consider that the next wave of the negative influence of the world crisis will be felt through consumer goods, imported to the country, as import makes up for a greater part of such goods in Azerbaijan".

Azer Mehtiyev notes that for keeping deposits in the banks, it would be better to divide them into several parts and deposit them separately, as the deposits of the population in the banks are secured by the fund of deposits insurance, which insures up to AZN 6,000. "Therefore, it is expedient to deposit in different banks the amounts, not exceeding this limit. On the other hand, naturally, it is risky to keep deposits in the banks under the established situation, as the capacities of the banks are restricted now. Therefore, even despite the efforts of the banks to attract depositors on more favorable conditions, it is necessary to be cautious", noted Mehtiyev.

According to the economist, the fact that the state budget for the next year envisions the oil price at the level, much exceeding the current price, is also dangerous: "The 2009 budget has already been confirmed. Under this budget, oil price will be $70 per barrel and the due calculations are made on this basis. Yet, today oil costs about $40 per barrel and analysis shows that further drop in oil price will be recorded. Considering the fact that Azerbaijani budget depends on oil by 70%, this influence will be recorded. Transfers of the state oil fund have a special weight in the budget. In this case, if there is a budget deficit next year, it can be neutralized from the state oil fund. But this can be the way out only for the next year. This opportunity is excluded in the further perspective".

According to Mehtiyev, if oil price continues falling down, such problems as delay in salary, pensions and some other negative processes may occur.

/Day.Az/