Azerbaijan Climbs into Deep Debt Hole - Expert

The reason for the search by the Central Bank of foreign exchange funds outside the foreign exchange market is that in the next two years it will experience a great need for them to meet external obligations and execute investment projects, the economist Rovshan Agayev said.

"In 2016, 85% of enforceable public debts are in foreign currency, and in 2017 this figure will reach 95%. The external debt will require 1 billion US dollars, which is 2.1 times more than the planned budget spending on health care," said the expert. According to him, in the world there are few countries like Azerbaijan, 10% of whose budget is directed to cover public external debt.

One of the public investment projects is the construction of the Trans-Adriatic Pipeline (TANAP). In 2017, $ 600 million will be used to finance the construction works from the state budget and also from the State Oil Fund. According to the expert’s estimates, another $ 4-4.5 billion will be required for the completion of construction works until 2018. Of this, Azerbaijan will have to find $2-2.5 billion.

Among the large corporate foreign debts Rovshan Agayev said $ 600 million was SOCAR’s debt that must be repaid in 2017. There are also the debts of banks and non-financial companies, obtained without state guarantees, but are subject to return in 2017. In this context, concern of the CBA is understandable, the economist stressed.

"In violation of its authority, the Central Bank does not disclose the international investment position of Azerbaijan. Therefore, it is impossible to "distinguish" the ratio of foreign assets to liabilities and make projections on this matter. Apparently, the Central Bank of Azerbaijan is interested in the management of the situation, using a black box," the economist Rovshan Agayev sneers.     ------08D