Ruling Elite Wants to Cover Its Losses Due to Poor Social Groups - Gubad Ibadoglu
If Azerbaijan really cuts its daily oil production by 35 thousand barrels, this means that at current prices, every day we will receive 1,925,000 dollars less, 57.5 million dollars less per month, according to the economist Gubad Ibadoglu.
In his profile on the social network Facebook the economist reminded that Azerbaijan at the Vienna meeting of oil-producing countries agreed to cut daily production by 35 thousand barrels, in other words 5.5% of the current production. He noted that Azerbaijan is risking it.
“If one considers that 47 million USD of the 57.5 million USD is pure profit, the exchange loss in connection with this decision will be half of non-oil exports. In this case, the reduction of foreign exchange earnings can activate factors of devaluation of the manat,” he said.
According to him, if after the countries’ decision on the reduction of oil production world oil prices increase by $ 10 or more, Azerbaijan may have a greater benefit from higher prices than from the loss in the amount.
“Otherwise, Azerbaijan will not be able to compensate for the income from the reduction of extraction. It is risky for the economy of such countries as Azerbaijan, where the national currency is dependent on oil revenues,” Ibadoglu said.
Besides referring to loans from the Asian Development Bank, the economist said the ruling elite and their families, who took full advantage of the development of the economy, want to cover their losses from the reduction of the economy at the expense of the middle class and the poor.
“That seemed not enough to them, and the government undertook heavy indebtedness and made future generations responsible for its return,” he said.
Ibadoglu said that after the increase in the volume of cooperation with the Asian Development Bank, Azerbaijan, after China and India, became the third major partner of the bank. According to him, this is due to the fact that in contrast to the International Monetary Fund or the World Bank, or the European Bank for Reconstruction and Development, the Asian Development Bank provides loans without any preconditions and without requirements of a reform package.
“If Azerbaijan really has become a donor country, then for what reason do we attract loans to meet domestic spending and deficit? The main objective of the national economy is to attract not loans, but direct investments into the non-oil sector, as investments do not create debts, but rather create value added, thus serving the development of the economy,” he said