Azerbaijan Cash Confusion
Government source admits re-denomination of the manat was rushed through.
Azerbaijan Cash Confusion
Government source admits re-denomination of the manat was rushed through.
One month into a mass currency conversion, Azerbaijanis are more confused than ever about the banknotes in their pockets.
Last February, Azerbaijani president Ilham Aliev ordered a re-denomination of the currency unit – the manat – as of January 1, 2006. However, unlike in other countries, where the process has generally involved getting rid of a line of zeros, Azerbaijan decided to peg its currency to the US dollar. One dollar equals about 4,600 old manats these days and so the new one manat note was made to be equivalent to 5,000 old ones.
Although most observers agree that it was time to trim the number of zeroes in the old currency, many were surprised at what they saw as an eccentric conversion rate that confused the population and also by the haste with which the change was made.
A government source admitted to IWPR that the decision had been rushed through, “Re-denomination was discussed for about a month and a half, and decided without consultation with government experts. We had spent two years prior to the re-denomination arguing that more careful preparation was needed, but they wouldn’t listen.”
Ilhama Gasymova, a Baku resident getting off a bus and cursing the drivers who take her to and from her home on the edge of the city, was outraged that the bus drivers were trying to cheat passengers by over-charging them.
“They put up a notice on our local bus, saying that the fare was 500 old manat or 20 new gapiks [100 gapiks now make up a manat],” she said indignantly. “Those who have new gapiks pay without question, but the fact is, 500 old manats equal 10, not 20, new gapiks!”
Alyona Moroz, a journalist, had a similar complaint. She went to her local post office to pay her electricity bill and handed the clerk 20,000 old manats, but was given a receipt for two, not four, new manats. Moroz did not notice the error until the next day, but when she went back to the post office to protest, they refused to heed her complaint.
“I’ve written in my newspaper about this, warning old, retired people against such mistakes,” said Moroz. “Post office and bank clerks were completely unprepared for the re-denomination themselves, so they cannot help people adapt to the new money.”
Elman Rustamov, who chairs the executive committee of the National Bank of Azerbaijan, said the bank plans to make three emissions of new notes and coins in 2006. During phase one, which began on January 1 and is still underway, the bank has circulated one and five manat notes and all the gapik coins.
Phase two, scheduled to begin in March, will see ten and 20 manat notes issued, followed by 50 and 100 manat notes in April. Rustamov said the public needed to get to know the new currency gradually and the old one should be retired gradually.
“The old money will remain in parallel circulation for a year, and will be re-circulated at least during the first six months," he said. "Six months from now we’ll sit down and think whether we need to keep feeding more old notes into the economy."
Azerbaijani retail outlets will have to display their prices in both new and old mantas until the end of the year, but shoppers complain they are having a hard time getting used to the new money and that people's ignorance is being exploited.
A government edict also caused confusion by stipulating that all recalculation of amounts from old into new manats must always be made in full, without remainder, meaning that whenever less than half a gapik is left, it should be rounded down to zero, and when more than half a gapik is left, it should be rounded up to one.
In other words, if the price of a product is 53.4 gapiks after recalculation, it should be brought down to 53 and if 53.6 gapiks, then 54.
As a result, the electricity company Barmek and the water company Azersu both raised their tariffs in the new recalculated currency, angering consumers. After an outcry, both companies backed down and brought back their old prices.
Shop owners and retail staff also complain of adaptation problems. Minister of Taxation Fazil Mamedov said that tax returns filed by retailers are full of errors and contradictions. “When we find an error, we give the taxpayer time to rectify it," he said. "Anything can happen during re-domination."
For ordinary people the change means making a brain-teasing calculation every time you make a purchase – and sometimes having your honesty tested.
“I bought fruit worth 35,000 old manats at the market,” said Nail Ahmedov, a construction worker. “So I gave the salesperson three old 10,000 notes plus one new manat, and he gave me 5,000 old manats back.”
Ahmedov said he didn’t realise the salesperson had made an error until he returned home, “So I had to go back to the market to give him his money back.”
Cashpoint machines are also being slow to catch up with the new change and will not be updated for the new manat until late February or early March. For now, if you are withdrawing cash, you are to type in the amount in new manats, but the ATM will mainly disburse old notes.
In the end, though, everyone accepts that the process has to be completed. Economic analyst Nazim Imanov argued, “Re-denomination was inevitable and whatever the temporary economic losses are, we must carry it through.”
Nurlana Gulieva is an economic journalist and IWPR contributor in Baku.
Last February, Azerbaijani president Ilham Aliev ordered a re-denomination of the currency unit – the manat – as of January 1, 2006. However, unlike in other countries, where the process has generally involved getting rid of a line of zeros, Azerbaijan decided to peg its currency to the US dollar. One dollar equals about 4,600 old manats these days and so the new one manat note was made to be equivalent to 5,000 old ones.
Although most observers agree that it was time to trim the number of zeroes in the old currency, many were surprised at what they saw as an eccentric conversion rate that confused the population and also by the haste with which the change was made.
A government source admitted to IWPR that the decision had been rushed through, “Re-denomination was discussed for about a month and a half, and decided without consultation with government experts. We had spent two years prior to the re-denomination arguing that more careful preparation was needed, but they wouldn’t listen.”
Ilhama Gasymova, a Baku resident getting off a bus and cursing the drivers who take her to and from her home on the edge of the city, was outraged that the bus drivers were trying to cheat passengers by over-charging them.
“They put up a notice on our local bus, saying that the fare was 500 old manat or 20 new gapiks [100 gapiks now make up a manat],” she said indignantly. “Those who have new gapiks pay without question, but the fact is, 500 old manats equal 10, not 20, new gapiks!”
Alyona Moroz, a journalist, had a similar complaint. She went to her local post office to pay her electricity bill and handed the clerk 20,000 old manats, but was given a receipt for two, not four, new manats. Moroz did not notice the error until the next day, but when she went back to the post office to protest, they refused to heed her complaint.
“I’ve written in my newspaper about this, warning old, retired people against such mistakes,” said Moroz. “Post office and bank clerks were completely unprepared for the re-denomination themselves, so they cannot help people adapt to the new money.”
Elman Rustamov, who chairs the executive committee of the National Bank of Azerbaijan, said the bank plans to make three emissions of new notes and coins in 2006. During phase one, which began on January 1 and is still underway, the bank has circulated one and five manat notes and all the gapik coins.
Phase two, scheduled to begin in March, will see ten and 20 manat notes issued, followed by 50 and 100 manat notes in April. Rustamov said the public needed to get to know the new currency gradually and the old one should be retired gradually.
“The old money will remain in parallel circulation for a year, and will be re-circulated at least during the first six months," he said. "Six months from now we’ll sit down and think whether we need to keep feeding more old notes into the economy."
Azerbaijani retail outlets will have to display their prices in both new and old mantas until the end of the year, but shoppers complain they are having a hard time getting used to the new money and that people's ignorance is being exploited.
A government edict also caused confusion by stipulating that all recalculation of amounts from old into new manats must always be made in full, without remainder, meaning that whenever less than half a gapik is left, it should be rounded down to zero, and when more than half a gapik is left, it should be rounded up to one.
In other words, if the price of a product is 53.4 gapiks after recalculation, it should be brought down to 53 and if 53.6 gapiks, then 54.
As a result, the electricity company Barmek and the water company Azersu both raised their tariffs in the new recalculated currency, angering consumers. After an outcry, both companies backed down and brought back their old prices.
Shop owners and retail staff also complain of adaptation problems. Minister of Taxation Fazil Mamedov said that tax returns filed by retailers are full of errors and contradictions. “When we find an error, we give the taxpayer time to rectify it," he said. "Anything can happen during re-domination."
For ordinary people the change means making a brain-teasing calculation every time you make a purchase – and sometimes having your honesty tested.
“I bought fruit worth 35,000 old manats at the market,” said Nail Ahmedov, a construction worker. “So I gave the salesperson three old 10,000 notes plus one new manat, and he gave me 5,000 old manats back.”
Ahmedov said he didn’t realise the salesperson had made an error until he returned home, “So I had to go back to the market to give him his money back.”
Cashpoint machines are also being slow to catch up with the new change and will not be updated for the new manat until late February or early March. For now, if you are withdrawing cash, you are to type in the amount in new manats, but the ATM will mainly disburse old notes.
In the end, though, everyone accepts that the process has to be completed. Economic analyst Nazim Imanov argued, “Re-denomination was inevitable and whatever the temporary economic losses are, we must carry it through.”
Nurlana Gulieva is an economic journalist and IWPR contributor in Baku.
