Elman Rustamov: "Inflation of 5-6% is optimal for Azerbaijan for 2009"

"Deflation is observed in Azerbaijan in the past months which led to reduction in inflation rate to about 12% per year. By our estimates this year inflation rate will be one-digit. I consider inflation rate on the level of 5-6% to be optimal", said Elman Rustamov at a press conference Friday.

He said inflation rate on the level of 5-6% is appropriate both for the population and for business.

At the same time Rustamov considers that inflation rate will be influenced by many factors including economic activeness.

We are interested in maintaining high business activity and we consider that conduction of monetary emission will have a positive influence on maintenance of this activeness.

Emission is among the main channels to support business activeness, especially on the background of inflation reduction", noted he.

The NBA president considers that the National Bank is planning to hold a monetary emission and is currently discussing its mechanism and volumes.

At the same time he considers that conduction of monetary emission will have a positive influence on the volume of money in circulation and crediting of the real economic sector.

"This year the banks must pay $1.5 bln of external debts. Withdrawing of this amount from circulation will have a negative impact on the real sector", noted he.

Rustamov added that in January-February of 2009 the volume of money in circulation will drop 15%.

"This drop is of seasonal nature as in the said period of the last year the drop in volume of money in circulation made 10%", noted he.

According to the State statistical committee in January of 2009 deflation in Azerbaijan made 0.6%, inflation totalled 11.0%.

Annual inflation rate in Azerbaijan in 2008 made 20.8%.

The Azerbaijani government forecasts yearly inflation rate to be 12-14% for 2009.