BAKU, Azerbaijan, July 11. The Covid-19 pandemic and the war in Ukraine are having a persistent impact on public finances in emerging Europe, Trend reports.
According to Fitch Ratings, public debt in most countries of the region in relation to GDP at the end of 2025 will be higher than the level at the end of 2019 (on average by six percentage points).
"The sovereigns that Fitch expects will post the
largest increase in debt/GDP in this period (aside from Ukraine)
are the two highest-rated: Czech Republic and Estonia (both ‘AA-’
with Negative Outlooks). We expect only five sovereigns to reduce
debt by more than 3% of GDP between 2019 and 2025. Of these,
Azerbaijan and Turkmenistan (both with Positive Outlooks) benefit
from high energy prices and Armenia (Positive Outlook) from
exchange-rate appreciation. The others are Croatia and Serbia
(Stable Outlooks), where primary surpluses and reasonably solid
nominal GDP growth will prolong the debt-reduction trend that
existed pre-pandemic," Fitch said.
Fitch Ratings noted that median government debt/GDP for the region
fell in 2022, reflecting high inflation, and we forecast it to fall
further in 2023 due to lower support to consumers to offset food
and energy costs.
"However, median debt/GDP is then projected to rise in 2024 and 2025, reflecting continued primary deficits and lower nominal GDP growth (projected to average 7.2% in 2024 and 2025 compared with 14.4% in 2021-2023)," the agency said.
Meanwhile, the state budget of Azerbaijan for 2023 provides for expenditures in the amount of 1 billion manat ($588.2 million) to repay the state debt and its obligations.