Azerbaijan's foreign debt pinned on citizens?

Baku/27.03.23/Turan: Azerbaijan again intends to resort to external borrowings. It was stated by President Ilham Aliyev at a meeting with heads of some German companies on March 13 in Berlin: "...According to the strategy until 2030, we will take loans for our strategic goals, facing our country, and the minimum amount we will raise for the implementation of this strategy is $40-50 billion. In other words, we will continue to borrow on issues related to the technological transition and at the same time we will build our future economic plans mainly on our own resources."

At present, there are 1,113 manats 50 gepiks of foreign debt per capita.

Why is Azerbaijan getting into debt?

Economist Elchin Rashidov spoke about it in the "Hard Question"" program.

According to him, it was a political decision. From the economic point of view, Azerbaijan doesn't need the loans. There are several rules to be followed when borrowing from abroad.

"First of all, funds should be borrowed for profitable projects. But if we mean loans for Karabakh development project, this is not a commercial project, but a social one, to a great extent. Borrowings for such projects shrink the economy and also create the risk of a debt trap for the population. Because, in the future, not only will the debt have to be repaid, but also the interest for servicing it. And a very large amount of money will accumulate for servicing the debt. Secondly, the profit generated should sufficiently exceed the interest rate of the loan," the economist emphasized. 

He pointed out that our most solid investment in Karabakh is the smart village project.

"However, the feasibility study of this project prepared by the Ministry of Agriculture is no good. The settlement of Karabakh is not being carried out in a scientifically based manner, but at the whim of officials. There is no optimal settlement plan," said the expert.

To his thinking, if we, i.e. Azerbaijan, make large borrowings, it will be an adventurous decision, for the rules listed above will be broken, Rashidov cautioned.

"This may lead to a shrinking economy, and, therefore, to a decline in living standards of the population," Elchin Rashidov warned.-0-