BAKU, Azerbaijan, May 27. The average rate of return on issued government bonds showed the highest rates of profitability in recent years in 2024, the review of the draft law on "the execution of the state budget for 2024 said, Trend reports.
Thus, in the reporting year, short-term (1-year) and medium-term (2- and 3-year) government bonds were issued with an average yield of 7.9 and 8.5 percent, respectively (in 2023, 6.7 and 7.9 percent).
“Despite the fact that the budget was executed with a surplus from January to November, the emergence of a sharp deficit at the end of the year poses risks related to the inefficient management of financial flows. At the same time, we would like to note that the increase in the yield of 1-year bonds from 6.7 percent to 7.9 percent, 2-year and 3-year bonds from 7.9 percent to 8.5 percent, as well as the transition to additional financing (at the rate of 6.0-8.0 percent) in the coming years causes the emergence of additional budgetary burden associated with debt service,” the report emphasizes.
“The volume of bonds placed by the Ministry of Finance at par in 2024 amounted to 4.9 billion manat ($2.8 billion). The state budget received 4.8 billion manat ($2.8 billion) for the placed bonds, of which 1,888.7 million manats (principal debt) was repaid on bonds issued in previous years,” the report says.
“Of the remaining 2.9 billion manat ($1.7 billion), 1.5 billion manat ($880 million) is directed to finance the budget deficit, while 1.4 billion manat ($820 million) is converted and directed to the repayment of the main volume of external public debt. This, in turn, increases the total amount of debt on government bonds by 3.01 billion manat ($1.77 billion) or by 47.5 percent compared to the same period of the previous year and will amount to 9.3 billion manat ($5.47 billion) as of 01.01.2025, as well as increases interest expenses incurred on bonds placed in the reporting year for subsequent years to 676.7 million manat ($398.3 million) (excluding short-term issues in the reporting year),” the information emphasizes.