Interview with the Chairman of the
Supervisory Board of Bank Respublika - Shakir
Rahimov
The
coronavirus pandemic and the collapse of world energy prices caused economic
problems in many countries. At the same time, oil exporting countries,
including Azerbaijan, faced the biggest economic challenge. The country's banks
play major role in eliminating the negative impact of the coronavirus pandemic
and lowering oil prices. We spoke with Shakir Rahimov, the Chairman of the
Supervisory Board of one of the country's leading banks – "Bank Respublika” about
the situation in the economy of Azerbaijan amid falling oil prices and the
fight against the spread of the coronavirus .
-
I would like to start our conversation with a
general question - how has the COVID-19 coronavirus affected global energy
prices, the stock markets and the global economy as a whole?
-
You have mentioned the oil prices. Can you
briefly describe what is happening in oil market?
-
What can you say about the impact of low oil
prices and the coronavirus pandemic on the country's economy? How prepared are
we for what is happening?
-
As an oil
exporting country, we are negatively affected by two external factors: the economic situation in the world and low oil prices. And this is a serious
challenge for the country. On the top of already mentioned shocks is also a self-isolation
policy within the country: people buy fewer goods and less use services. But I
am sure that together we will cope with this challenge. We are now much better
prepared for low oil prices than at any other time in the past, for example, in
2015. I will try to list the main, in my opinion, positive factors:
1) probably, the most important is the
reaction and behavior of the country's administration in a crisis situation. It
is encouraging that logical decisions are taken quickly and then successfully
implemented. I would like to underline the personal initiative of Mr. President
in this scope;
2) budgetary rules have been adopted to reduce
the negative impact of oil price volatility on the country's budget, which
allows to ensure all social obligations of the state;
3) we have increased international reserves
since 2015, and if we compare the ratio of reserves to the country's GDP in US dollar
terms, this figure is much higher than it was in 2015;
4) low ratio of external debt to GDP;
5) tighter control over speculative currency
transactions;
7) the implementation of an exceptional model of synthesis of new generation’s managers (knowing many of them, I can say that these are high-class professionals) with experienced older generation’s managers.
-
You know that in order to reduce the negative
impact of the coronavirus pandemic on the economy, macroeconomic stability and
the business climate in the country, President Ilham Aliyev signed a decree
that set important tasks for many state bodies. Could you please give us more information
about this decree and other steps taken by the country's administration during
this difficult time?
-
In my opinion,
the state has taken exceptional proactive measures to prevent the spread of
coronavirus in the country, several weeks (and in some cases a whole month)
ahead of most of the other countries. As some examples of timely decrees of Mr.
President can be mentioned the creation of an operational headquarters consisting
of senior officials under the management of the prime minister; allocating funding
to reduce the negative impact of the coronavirus pandemic on the economy and
social sphere, establishment of a Fund to Fight the pandemic, closing borders, introduction
of a special regime, increase of medical workers’ salaries.
By a decree of March 19 Mr. President demonstrated
the most important in the current situation: that the government will provide
the necessary support to the population and the private sector. In accordance
with the decree, 1 billion manats was allocated to support the economy, social
sphere and macroeconomic stability. It is noteworthy that we were one of the
firsts to allocate money from the budget for these purposes. The Ministry of
Economy, the Ministry of Finance, the Ministry of Labor and Social Protection
and the Central Bank were given exact tasks: revealing sectors of the economy
and segments of the population to suffer most from the COVID-19 pandemic;
preparing and providing the Cabinet of Ministers with the information on the levels
of potential losses in these areas and suggesting measures to support these
groups; assessment of the negative impact of the coronavirus pandemic on the
banking sector and macroeconomics; preparation of proposals to support the
stability of manat and consumer prices.
By another presidential decree was created a
support Fund to Fight coronavirus, to which the state transferred 20 million
manat. It is very heartwarming that not only the public but also the private
sectors responded promptly to the president’s call to demonstrate its social
responsibility. In just a couple of days, more than 40 million manat was
transferred to the fund. The banking sector immediately supported the
initiative of Mr. President.
- How do
banks see their social responsibility? What are banks and, particularly, Bank
Republic doing in this direction?
- It is very important to note that banks,
realizing their social and state responsibility could correctly react to emerged
needs: to ensure uninterrupted supply of necessary goods to the country banks transferred
entrepreneurs’ funds swiftly in the same time continuously serving a large flow
of individuals. Banks have been working seven days a week and almost without breaks
during the last weeks. I am very proud of all banks’ employees, who, despite
the risks, tiredness and many other problems, were working courageously, spoke
to a large number of customers fulfilling their civic duty. An important role
in the coordinated work of banks played the Central Bank of Azerbaijan and the
Association of Banks of Azerbaijan. Meetings were held and crucial decisions
were made almost every day.
- Well, the final question: as you said, external shocks led to problems in many sectors of our economy. What, in your opinion, should the state bodies and banks do to compensate for the negative consequences?
- In my opinion, the government should take
the following main measures:
2) to provide additional tax and customs preferences to companies that did not lay off their employees;
3) to provide temporary compensation to the least protected layers of population who have lost their sources of income due to the coronavirus;
4) to more actively attract small and medium enterprises to participate in tenders announced by the government;
5) to strengthen the lending through state funds (Entrepreneurs Development Fund, Agency for Agricultural Loans and Development, etc.);
6) to support banks in microlending development, especially in the regions;
7) to subsidize part of the interest of loans to entrepreneurs and consumer loans;
Banks should:
1) improve remote service channels and ensure their safety;
2) develop mechanisms for providing customers with a grace period. Of course, the regulator - the Central Bank - should support banks by prudential regulation relaxation and providing the needed liquidity.
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