The Asian Development Bank (ADB) in the annual report Asian Development Outlook (ADO 2016) predicts this year's deficit of Azerbaijan's payment balance of 0.6% of GDP and only next year it will find a surplus (1.5%).
At the same time the trade balance due to the oil trade will be in favor of exports (+ $ 7 billion 38 million), In the following year it will be even more - $ 8 billion 156 million.
The report's authors recommend the government to diversify the economy by strengthening the financial sector, as Azerbaijan is vulnerable due to dependence on oil revenues, and commodity prices for oil, according to analysts, will not rise at least until the end of the year.
ADB offers to finance small and medium-sized enterprises, which will contribute to higher growth of non-oil sectors of the economy. As the share of loans and deposits in foreign currency increases, the risk associated with foreign currency liabilities and non-performing loans of banks also increases. Poor banking practices and the spread of non-performing loans are challenging the sustainability of banks and their effectiveness in maintaining market liquidity. In addition, the recent absence of sufficient funds for refinancing at the Central Bank of Azerbaijan cuts the ability of commercial banks to grant loans, which especially strikes regional entrepreneurs.
The authors believe that the provision of full deposit insurance, regardless of their amount, may increase confidence in the banking system, and the covering of interest rates on deposits in foreign currency at the level of 3% while maintaining 12% for deposits in manats can encourage the use of the manat.
Speaking about the creation of the Chamber of Audit, the ADB believes that the new regulator should first prove the efficiency of a wide range of financial institutions at various characteristics.
The analysts recommend to amend the Bankruptcy Law, strengthening the rights of creditors, which will stimulate the expansion of the loan portfolio of banks and micro-finance organizations and expand access of borrowers, especially businessmen, to finance. --17D-
Economics
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Azerbaijan’s economy, which is heavily dependent on oil revenues, faces a stark warning in the 2021 report by Carbon Tracker titled “Beyond the Oil States: The Urgent Need to Reduce Dependence on Oil in the Context of the Energy Transition.” The report ranks Azerbaijan among the most vulnerable oil-dependent countries, placing it in the "5th group" — a category reserved for nations expected to experience a decline in oil and gas revenues exceeding 40% over the next decade. This group includes Angola, Bahrain, Timor-Leste, Equatorial Guinea, Oman, and South Sudan, highlighting shared economic risks for these states.
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Azerbaijan's non-oil and gas exports rose 3.5% year-on-year to $2.8 billion during the first ten months of 2024, the Center for Analysis of Economic Reforms and Communication (CAERC) reported in its November "Export Review."
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Azerbaijan Railways CJSC (ADY) will modify the schedules for commuter and domestic trains in line with the Cabinet of Ministers' decision to adjust work and rest days in November, aiming to ensure safe and comfortable travel during the COP29 event, the company announced.
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In Azerbaijan, the government has increasingly relied on tax exemptions for imported goods as a tool to stabilize domestic market prices. The exemption from the 18% VAT on wheat imports, extended this year, exemplifies this approach. New measures have also been introduced, including tax relief on imports of electric vehicle chargers, while exemptions for high-cost medications are currently under discussion. Notably, defense imports continue to be free from taxes and customs duties.
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