Azerbaijan, Baku, Apr. 14 / Trend I.Khalilova /
The Central Bank of Azerbaijan (CBA) plans to follow a new strategy for the development of the country's banking sector in the in the second half of 2010, CBA Chairman Elman Rustamov said.
"Today, we are mainly working on a new strategy for economic development. We are working as part of the strategy with individual institutions, both local and international, in particular, the World Bank," Rustamov said.
The new economic model should be "one of diversification," he said, which establishes an increase in export capacity, provides access to world markets and increases competitiveness.
"The population has hit 9 million and domestic demand will not allow the building of a large economy," Rustamov said. "We have already achieved great success in terms of GDP per capita - purchasing power parity is $9,000, which corresponds to the lower levels of middle income, but there are middle and upper levels of this index. To move to the middle scale of the middle income countries, per capita income should be $15,000-1$7,000, which is in line with Southern Europe."
Accordingly, Azerbaijan needs a 2-3-time increase in GDP to achieve this target, he said. This level can be achieved by 2025-2030, Rustamov added.
"The country requires a new model of economic growth to achieve this level," he said. "This should be a model of diversification, which cannot be achieved on the basis of oil. It can be reached on the basis of external demand with strong diversification of non-oil exports, which include competitiveness, educational development and everything else. The country should have a good educational system - good workers and engineers for the economy to accept foreign investment in a large scale."
Based on the calculations, private investments should not increase to 40-50 percent of the non-oil GDP to achieve such success.
"The economy can absorb $5 billion annually," he added. "These volumes of the economy can safely be mastered, and the CBA is able to absorb these dollar-denominated funds through the release of money in the currency market, and then stabilizing the exchange rate. I think we can handle such a task. Even in the previous cycle [tripling the economy], we proved that we can work with such macroeconomic indicators when the money supply and investment are growing at an accelerated pace."
Rustamov believes the banking sector must play a major role in implementing the new economic strategy.
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