Aliyev replaces long-serving central bank head with loyalist

The Azerbaijani Parliament has approved a proposal by President Ilham Aliyev to replace the longtime governor of the Central Bank, Elman Rustamov, with the CEO of Pasha Bank, Taleh Kazimov.

Prior to his dismissal on 12 April, Rustamov had served as the Central Bank’s governor for 27 years.

His replacement, 38-year-old Taleh Kazimov, was until his appointment the chairman and CEO of Pasha Bank. The bank is widely seen as being linked to the ruling family. According to the Organised Crime and Corruption Reporting Project (OCCRP), Pasha Bank belongs to relatives of First Lady and Vice-President of Azerbaijan Mehriban Aliyeva.

On Wednesday, Rustamov was appointed an adviser to Prime Minister Ali Asadov.

Rustamov had overseen the country’s monetary policy since 1995, during which time the central bank has largely pegged the value of the manat to the dollar, using currency gained through oil and gas sales to prop up the currency’s value.

Perhaps his most controversial moment was the 2015 devaluation of the manat, when the currency lost almost half its value, as the currency was allowed to float for some time. The move sparked protests, with the central bank coming under fire.

In 2017, the central bank once again pegged the manat’s value to the dollar.

Farid Mehralizade, an independent economist based in Baku, told OC Media that the Central Bank was not responsible for the devaluation. 

In Azerbaijan, the Central Bank has ‘almost no opportunity to have a serious impact on the economy, except to send a psychological message with interest rates’, Mehralizade said.

He blamed the devaluation on the ‘lack of development of the non-oil sector’ stating that the decision was made due to declining oil revenues as a result of a global price drop. 

Assessing Rustamov’s performance over the years, Mehralizade said that he could have been more communicative as the governor, including by openly informing the public before the sudden devaluation of the manat.