Azerbaijan’s overall state debt rose more than forecast due to COVID during 2020 due to COVID and depressed crude oil prices during the year, a government source told The Tribune.
Nevertheless, the figures remained low by international and regional standards.
As of January 1, 2021, the country’s total debt amounted to 16.94 billion manat (almost $10 billion) or 23.4% of GDP, exceeding previous expectations of 22.7% of GDP. Oil exports make up more than half of the country’s revenues, which were short of expectations during the year, in addition to the economic effects of COVID.
The government has yet to officially release the figures, which are normally published 60-90 days after the end of each calendar year.
Taking into account the pandemic, a decisive victory during the 30-year war with Armenia, and the depressed 2020 crude prices, the country seems to have come thru relatively unscathed in macroeconomic terms, despite the rise in overall debt, still relatively low as a percentage of GDP.
The bulk of the volume of external debt – $8.1 billion – was made up of direct borrowings from the government – bond issuances and loans from international institutions. Internal debt is generally financed by treasury bill emissions.
According to the 2021 budget, debt servicing costs this year will amount to about 2.2 billion manat (7.7% of state budget expenditures), which is a 27.4% increase from 2020. By contrast, in 2020 overall debt servicing rose less than 1 percent compared to the previous year.
According to the government’s strategy on public debt, approved in 2018, the overall debt burden is targeted to decrease by 2026 to $7.7 billion (14.1% of GDP), of which $6.5 billion (12% of GDP) is slated to be external debt.
As for 2021, the IMF expects had previously forecast Azerbaijan’s state debt in 2021 at 20% of GDP, but is due to update its figures in April. The government has yet to give a prognosis for 2021, but fluctuating world oil prices, the development of the national vaccination process against coronavirus and the implementation of some economic reforms will doubtless influence its estimates.