Why did the value of money fall in Azerbaijan? | Eurasia Diary - ednews.net

26 June, Wednesday


Why did the value of money fall in Azerbaijan?

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On February 8, President Ilham Aliyev signed an order to increase the minimum salary.

According to the order, the minimum salary per month was defined 180 manats on March 1. The decision was a very essential step towards improving the social situation of the country's population. 

However, before and as it is now, the rise in prices for consumer goods has led to a breakdown of balance between wages and increased product prices. Last year, by the decision of the Tariff Council, increasing the fare in public transport from August 1 naturally, the idea that money is worthless is generated within society. 

Economist scientist Elchin Suleymanov told  Eurasia Diary about this issue.

“The value of money is compared to the purchasing power and the foreign exchange rate. There is no significant reduction in AZN in foreign currency, and even stronger than the euro. At the same time, according to official statistics, the inflation rate is 2-3 percent. Just in the last few months there is an expensiveness in the price of certain goods. There are some causes. The initial cause is the seasonal factors and increasing of some products such as potato, onion etc. which is related to the situation in the neighboring countries.  Because of the rise in price of onion in Turkey, exports are increased from us to them. Iran, the main importer of potatoes, has banned the export. The speculators who take this opportunity raise the price, "said the expert.

On his words, another cause is the change of tax code and the reduction of the "shadow economy" by increasing the administration of the tax and customs system. (Any type of activity that is hidden from government agencies or tax evasion is considered a shadow economy activity. Taxation of even a part of the "shadow economy" in Azerbaijan means an average of 1.8-3 billion manats in the state budget annually.) Officially realized sales have led to price increases in markets. The third is the increase in the money supply. (rising of a minimum wage, scholarship, etc.)

Elchin Suleymanov says that if devaluation and concessional lending are to be introduced in the coming days, the price will probably rise due to a slight increase in demand. As I noted, the rise in the cost of the commodity has an impact on the price. But for some products, egg prices have become cheaper. If the central bank monitors the money supply and other instruments, I think there will be no problem, "he said.

 

Written by Gulnar Salimova

Translated by Ayten Rasulzadeh

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