“One should expect a further devaluation of the manat any day now…” claims economist Fikret Mammadov.
Azerbaijanis on the public and expert level are beginning to brace themselves for a third devaluation of the manat. Economist Fikret Mammadov shared his opinion on the matter and oil prices in a recent interview with “Novosti – Azerbaijan.”
How realistic is a third devaluation in your opinion? If so, by how much value do you expect the manat to lose?
I think it’s fair to say that we could expect a devaluation of the manat even today. Because the government is spending massive amounts of money trying to keep the currency afloat. Were it not for government interference, the real value of the manat would be about 2.4 – 3.0 AZN to the dollar. The government is in need of a deflation in order to deal with social issues and pay off salaried government workers.
Having depreciated the value of the manat by 50 – 100, the government has saved itself a little money and been able to pay salaries and pensions by about 10% less. This allows the government to buy itself some time, and portray itself as economically well – off and stable. However, I personally haven’t seen any plans put forward by the government to emerge from the crisis. All I see are a number of games being played to buy time and to wait for oil prices to rise again. One of these “games” is the devaluation of the national currency.
In the past few months we’ve observed an increase in oil prices, breaking the record for the past 9 months. But recently they fell again. What, in your opinion, will oil prices be in the near future?
In the beginning of January, when oil was around 38 dollars per barrel, I predicted it would fall to about 32, and shortly after to 28. This came true. I then predicted a rise to 48 – 50, maybe even 52. And that it would later sink as far as 12 – 14 dollars per barrel.
Most of these predictions came true, and if they didn’t, they were off only by a small margin, for which I’d like to apologize. Now that oil is back up at around $52.70 per barrel, we can only wait for oil prices to plummet..
