BAKU, Azerbaijan, March 4. Azerbaijan and Albania signed an agreement on economic cooperation last week, Trend reports.
The paper calls for increased collaboration in key areas such as
trade, investment, energy, transportation, infrastructure,
agriculture, tourism, the environment, and humanitarian aid.
Furthermore, last week, the quantity and composition of
Azerbaijan's state-guaranteed debt were revealed. Thus, on January
1, 2024, the country's state-guaranteed debt (domestic and
international debt) totaled 11.4 billion manat ($6.7 billion), or
9.3 percent of GDP in 2023.
According to the Azerbaijani Ministry of Finance, 10.2 billion manat ($6 billion) of the state-guaranteed debt, or 89.3 percent, came from external sources and 1.2 billion manat ($705 million), or 10.7 percent, from domestic loans. Moreover, $4.4 billion, or 73.9 percent (7.5 billion manat), of the external guaranteed debt fell on the state guarantee issued for the obligations of the Southern Gas Corridor CJSC.
On the reporting date, 52.4 percent of the portfolio of
state-guaranteed obligations was fixed-rate, while 47.6 percent was
variable-rate.
The portfolio of state-guaranteed debt was composed of the
following currencies: the US dollar (64.1 percent), the euro (22.2
percent), the manat (7.1 percent), the Japanese yen (4.2 percent),
and other currencies (2.3 percent).
68.8 percent of government-guaranteed debt must be paid back to
creditors within 5 years, 17.4 percent within 5–10 years, and 13.8
percent within more than 10 years.
Some 15 percent of the government-guaranteed loans are provided by various investors: 5.6 percent by the World Bank, 9.9 percent by the European Investment Bank, 1.4 percent by the Islamic Development Bank, 5.9 percent by the European Bank for Reconstruction and Development, 5.7 percent by banking syndicates, 4.2 percent by the Japan International Cooperation Agency, 10.7 percent by domestic lenders, 3.6 percent by the Japan International Cooperation Agency-Korean Export-Import Companies, 8.2 percent by the Asian Infrastructure Investment Bank, and 29.7 percent by other lenders.
The Central Bank of Azerbaijan (CBA) has ordered Premium Bank OJSC to take measures to improve internal procedures.
"The decision was taken owing to a violation of Article 47 of the Banks Law. The report submitted to the Central Bank at the end of January revealed that, due to incorrect calculation of the liquidity coverage ratio in foreign currency, the requirement to keep this indicator above the established threshold defined in paragraph 7.2 of the "Procedure of Liquidity Risk Management in Banks" was not met," the statement of the CBA said.
In addition, the CBA board approved this week the “Procedure for organizing and carrying out the activities of a payment system operator.”
According to the decision, the payment system operator must have a developed business plan for the first three years of its activities, as well as an appropriate organizational structure and internal control system covering all areas of its activities, to ensure reliable and secure management of the payment system.
The operator must continuously monitor the functioning of the payment system within the framework of the internal control system and evaluate the achievement of its goals.
It was also noted last week that Haifin Company from the United Arab Emirates (UAE), specializing in financial technologies, may enter the Azerbaijani market.
Besides, international rating agency S&P Global Ratings shared forecasts on GDP growth rates in Central Asia and the Caucasus. Thus, according to the forecast, GDP growth rates in Central Asian and South Caucasus countries will average four percent in 2024.
According to the estimate, after experiencing remarkable growth dynamics in 2022–2023, GDP growth rates in Central Asian and Caucasus countries are slowing while staying strong.
Furthermore, the rating agency expected that non-resident
deposits in Central Asia and the Caucasus would stay reasonably
stable through 2024.
S&P Global Ratings emphasized that a favorable macroeconomic
environment will promote consistent asset quality in these
countries.
The agency also noted that strong credit expansion will boost
earnings growth.
"Domestic deposits, government funding, and financing from
international financial institutions will remain the main sources
of funding for the region's banking sector, and a favorable
macroeconomic environment will support the growth of these sources
of funding," the agency said.