Transcript Макроэкономический Анализ и Обзор Финан

NATIONAL BANK OF AZERBAIJAN
KHAGANI ABDULLAYEV, EXECUTIVE DIRECTOR
Contents
2
1. Recent Macroeconomic Developments
2. The Global Crisis and the Banking System
3. Prudential Regulation and the Monetary Policy
4. Policies for 2009
1. Recent Macroeconomic Developments
3
High economic growth has been driven by the oil industry expansion and active fiscal policy
Fiscal Policy and Economic Growth
Economic Growth in Azerbaijan, %
70
24%
60
20%
83%
77%
60%
16%
50
90%
19%
60%
12%
40
8%
30
4%
0%
20
30%
15%
2003
14%
2004
8%
2005
12%
2006
11%
15%
0%
2007 2008 П
10
Growth
rate of
non-oil GDP ВВП
темп
роста
ненефтяного
0
2003
2004
2005
GDP growth rate
2006
2007
Oil GDP growth rate
2008
темп
роста
неторгуемых
отраслей
Growth
rate of
the non-tradable
sector
темп
роста
гос.
расходов
(правая
шкала)
Growth
rate of
public
expenditures
(right
scale)
1. The average annual growth rate stood at 24% in 2004-2007
2. Rising public expenditures (investments) has been the main force behind booming nontradable activities. Up to 75% of new jobs have been concentrated in the non-tradable sector.
1. Recent Macroeconomic Developments
4
Growth of money supply and inflation
25%
180.0%
The non-oil fiscal deficit, mln.AZN
21%
20%
17%
15%
120.0%
6000
2005
2006
-10%
2007
-60.0%
2000
Money
supply
growth (right
scale)
Темп
роста
денежной
массы
(правая шкала)
Реал.
% по кредитам
Real interest
rate on loans
2003
2004
2177
2004
0.0%
1097
2003
-4%
2008
4000
564
0%
60.0%
644
106% 45%
5%
3644
168%
10%
-5%
8000
7277
Given the large scale use of the oil revenues, the money supply almost tripled in 2006-2008
0
Среднегодовая
Annual average инфляция
inflation
2005
2006
2007
2008 (11
мес.)
1. The non - oil GDP monetization reached almost 40%;
2. Aggregate demand expansion has been followed by rising inflation, while the real income
growth staying positive (10-15%) ;
3. Declining real interest rates stimulated “consumer credit boom”.
1. Recent Macroeconomic Developments
5
The current account surplus reached 40% of GDP. Given the growing demand for credit,
banks increased external sources of borrowing
External sector and bank borrowings
120%
2500
98%
100%
80%
40%
72%
64%
60%
48%
2200
1500
46%
29%
-20%
2. Banks’ loan portfolio increased 5
times in 2004-07.
1000
20%
0%
2000
1. The ratio of loans to individuals
to consumption expenditures
increased from 3% to 22% in
2001-2007
1%
-28% -30%
2003
2004
2005
-40%
18%
2006
31%
2007
38%
2008
500
0
3. 2/3 of the loan portfolio has been
concentrated in the non-tradable
activities
Темп
роста
Growth
rate кредитов
of external loans
Current
Счет
тек.account/GDP
операций/ВВП
Banks’ foreign
borrowings,банков,
million manats
(right
scale) шкала)
Внешние
обязательства
млн. ман.
(правая
4. Ratio of bank assets to the non-oil
GDP approached 60%
1. Recent Macroeconomic Developments:
Growth Stabilization in 2008
6
As the oil extraction approached its peak level, the growth of the industry started stabilizing,
inflation rate showed signs of declining
Monetary base growth rate
101%
48.5%
Credits growth rate
98.2%
46%
29/12/2008
5%
19/12/2008
45%
09/12/2008
Real Estate Prices
29/11/2008
15.4%
19/11/2008
19.6%
09/11/2008
Headline Inflation
30/10/2008
15.4
20/10/2008
11.4
10/10/2008
non-oil GDP
30/09/2008
10.5
As of end of
December
0.7899
20/09/2008
36.8
0,8453
10/09/2008
oil GDP
0.830
0.820
0.810
0.800
0.790
0.780
0.770
0.760
0.750
0.740
31/08/2008
12.7%
21/08/2008
26,8
GDP growth rate, %
The basket value of AZN
11/08/2008
2008
01/08/2008
2007
1.
With the world financial crisis turning into global recession, Azerbaijan was not under its heavy impact
2.
Inflation did not grow as high as in 2007 due to 1) falling commodity prices at the world markets 2) the
Nominal Effective Exchange rate appreciation at more than 12% (AZN is pegged to basket)
3.
The money supply growth has been twice lower than in 2007, but the non-oil GDP continued growing at
two digit level as a result of sufficient fiscal stimulus to economy
1. Recent Macroeconomic Developments:
Global Crisis, External and Fiscal Sustainability
7

Strategic foreign exchange reserves (State Oil Fund, Central Bank and Treasury) of
Azerbaijan - 18.1 bln. USD
1. Reserves/ gross foreign debt ratio: 200%
2. In months of the non-oil imports of goods and services: 27 months

International Investment Position, net claims: 13 bln. USD

Share of bank’s external liabilities in total liabilities : 25%

Forecast for the State Oil Fund reserves with the oil prices of 30$ per barrel, in
percent of GDP (transfers to state budget excluded)
2009
2010
2011
2012
14%
13%
11%
9%
2. The Global Crisis and the Banking System
8
Banks’ reaction to global crisis was quite rational: over 1 bln. USD out of outstanding foreign debt
was paid back.
In addition, under psychological impact of global crisis and prudent risk management policies of the
central bank, banks switched to conservative credit policies . The growth rate of credits moderated
Growth rate of loans in Azerbaijan, %
Monthly growth rate of credits in 2008
40%
120
35%
98.2
100
30%
25%
80
20%
64.0
15%
60
47.6
46.4
45.6
10%
5%
40
28.9
0%
20
-5%
7
0
2002
2003
2004
2005
2006
2007
2008
Small-sized banks
IBA
Medium-sized banks
Banking system
2. The Global Crisis and the Banking System
9
2000
Liquid assets and the liquidity composition
in 2008, mln AZN
Schedule of the foreign debt service
by banks
25
400
1800
9.00%
8.0%
1600
20
7.5%
350
1400
8.00%
6.7%
1200
15
250
1000
800
10
7.00%
300
5.2%
6.00%
5.4%
5.00%
200
600
400
5
200
150
100
0
0
283
218
317
337
Nostro
T-bills
cash
liquid assets/assets (right sc)
3.00%
228
2.00%
50
1.00%
0
correspondent accounts
4.00%
0.00%
december I quarter
2008
2009
II quarter III quarter Iv quarter
2009
2009
2009
external debt, mln. manat
external debt/assets (right sc)
1. Because of squeezing schedules on the foreign debt service, banks accumulated enough liquid assets
as a precautionary step to safeguard against any unexpected events
2.
Ratio of liquid assets to the foreign debt stock is 99%, while its ratio to total assets is 21%
3. Prudential Regulation and the Monetary Policy:
Main Steps in 2008
10
PRUDENTIAL REGULATION:
1. Strict Provisioning Policy and Tight
Lending Standards:
o increased risk classification of assets
o increased LTV (from 120 to 150%)
2. Risk Management requirements - private
action plans on individual banks
MONETARY POLICY:
1. Reduction of the main refinancing rate
from 15% to 8%
2. Reduced required reserves from 12% to
6%
Provisions
450
7%
400
6%
350
5%
300
250
4%
200
3%
150
2%
100
1%
50
0
0%
3. Abolition of a 5% reserve requirement on
external borrowing
4. The resulting impact: liquidity injection
equivalent to 10% of the monetary base
Provisions, mln. manat
Provisions/credit (right sc)
3. Prudential Regulation and the Monetary Policy:
Policy Results
11
Overdue loans in 2008
80.0%
Savings of individuals, mln. AZN
7.0%
2000
1800
6.0%
60.0%
1600
5.0%
40.0%
1400
1200
4.0%
20.0%
1000
800
3.0%
0.0%
2.0%
600
400
200
-20.0%
1.0%
-40.0%
0
0.0%
Growth rate of overdue loans, %
Growth rate of loans, %
demand deposits
term deposits
Ratio of overdue loans to portfolio, % (right sc)
Main policy outcome in 2008: Stability, High Liquidity, Adequate Portfolio Quality
4. Policies for 2009
Risks in 2009:
12
-
Uncertain oil prices and global demand;
-
Decline in investment flows around the globe;
-
Impact of crisis in neighbors (Russian Federation: ruble depreciation, falling money remittances
etc.)
Main Policy Task:
Smoothing the impact of global crisis on domestic economy and prevention of the sharp demand
contraction
Supporting Policy of the National Bank of Azerbaijan:
-
Sound Prudential Policy (strengthening the capital position, maintaining adequate level of the asset
quality , liquidity and risk management)
-
Liquidity Support to banks through activating the refinancing facilities
-
Allow for More Exchange Rate Flexibility to Absorb External Shocks and to Focus More on
Liquidity, Demand Management and Inflation Targets
-
Confidence measures: Central Bank”s guarantee on lending at the interbank money market and
further increase of the deposit cell covered under the current deposit insurance scheme
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