Moody’s Investors Service has maintained its negative outlook on Azerbaijan`s banking system for a year and a half
Moody's Investors Service has maintained its negative outlook on Azerbaijan's banking system for the next 12-18 months. "A challenging operating environment combined with a significant devaluation of the local currency over the past year, will weigh further on Azerbaijani banks' asset quality, profitability, capitalization and funding. "We expect an increase in system-wide problem loans in Azerbaijan to around 20% of gross loans by the end of 2016, from 16% in December 2015," explains Ms. Malyukova. "This comes as the weaker manat pushes up the debt servicing burden for borrowers amid deteriorating market conditions." Funding conditions have also weakened, mostly as a result of a loss of confidence in the manat. Foreign-currency denominated deposits increased to 82% of total deposits as of the end of 2015, up from 50% a year earlier. This widens the mismatch between foreign-currency assets and liabilities and increases banks' vulnerability to further exchange rate volatility. -02D-
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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