The manat currency has lost more than a third of its value against the dollar in the past month and the central bank has burned through over half its foreign currency reserves trying to prop the manat up in the face of low oil prices.

"The treasury agency will start issuing state bonds in the near future. We will be offering yield rates on manat bonds which are above inflation," Sharifov told an Azeri television channel in an interview shown late on Sunday evening.

"We are ready to offer 10-12 percent rates."

On dollar bonds, the finance ministry would offer yield rates of 3 percent, he said.

"State bonds will be one of the sources (of revenue) to cover the budget deficit," Sharifov said.

Azerbaijan's central bank said it sold a total of $39 million on the foreign exchange market on Monday to support the manat.

Sharifov said the government had revised its annual inflation rate forecast for 2016 up to 10-12 percent from a previous 3.3 percent.

The government's higher inflation outlook is due to rising inflationary pressures following the devaluation of the nation's manat currency in December, Sharifov said. Azerbaijan's consumer prices grew by 4 percent in 2015.

Azerbaijan's parliament approved a package of measures last week aimed at supporting the manat. Some limits on foreign currency outflows were imposed, the insurance limit on deposits held in local banks removed, and a 10 percent tax on interest paid on retail deposits abolished.

Sharifov said a 20 percent tax imposed on foreign currency exports from Azerbaijan would not apply to foreign investors. "This duty does not apply to foreign investors," he said. 

 

(Reuters)