Azerbaijan Still Depends on Oil Prices

According to the research note by Fitch Ratings, which was presented by the analyst on Azerbaijan Paul Gamble, economic progress is possible after stabilization of the exchange price of oil at least at the level of $ 35-40 per barrel.

According to him, this year's GDP will fall by 3.3%, and in 2017-2018 there will be a GDP growth of 1.5 to 4%. He predicted double-digit inflation for the year amid falling production of hydrocarbons in the non-oil sector of the economy. There will be a slight increase at the start of consolidation of the manat, although to enhance its credibility in the country needs serious work of the government.

The agency still considers low capitalization of local banks, the majority of whose capital adequacy ratio decreased by 3-5% after the double devaluation of the national currency.

The share of problem loans (overdue more than 90 days) at the end of last year was at 9.5% (+ 1.2% per year) with the prospect of growth this year. There are also restructured loans (15% as of 1 January), which also affects the quality of banks' assets.

By January 1, there was a serious outflow of deposits - from 10 to 15%. In addition, banks are financed at more than 20% of their obligations by the Central Bank of Azerbaijan, or by other government agencies, which creates additional difficulties in overcoming the crisis. --17D-