BAKU, Azerbaijan, Mar.2
By Zeyni Jafarov – Trend:
Azerbaijan's fiscal policy in 2021 will be softer than in the previous year, which will contribute to a faster recovery of economic growth, Gulnara Khaidarshina, deputy head of the market analysis department at Russian Gazprombank, told Trend on Mar.2.
According to Khaidarshina, budget expenditures during the year will increase by 3.8 percent, while the upper limit of the deficit will make up nearly 3.1 billion manat ($1.8 billion) or 4.1 percent of GDP. The attraction of borrowed funds, to finance the budget deficit, will allow limiting the transfer from the State Oil Fund of Azerbaijan (SOFAZ).
"Given the expected growth of the Azerbaijani economy by at least 4.1 percent in 2021, at the end of the year, the ratio of Azerbaijan's public debt to GDP will make up 23.9 percent, growing only by 0.5 percentage points compared to 2020, which is a slight increase in a debt burden that, nevertheless, will remain low," she said.
She also stressed that Azerbaijan's international reserves, including the assets of SOFAZ, exceed the projected level of public debt by the end of 2021 by 4.5 times, taking into account new borrowings.
Besides, the bank representative noted that in order to predict the ratio of Azerbaijan’s state debt to GDP in the medium term, it’s important to take into account the expected maintenance of a stable rate of the Azerbaijani manat by the Central Bank. This will allow avoiding an increase in the ratio of public debt to GDP in case of repeated external shocks.
The expected attraction of new public debt by Azerbaijan is neutral for its Eurobonds, summed up Khaidarshina.
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