ADB: Increase in demand for imports of services for Azerbaijan’s energy sector expected in 2013
Azerbaijan, Baku, June 3 / Trend, E. Aliyev /
According to the Asian Development Bank (ADB), the current account balance in 2013 will decrease to 13 percent of GDP due to increased imports of wheat, cars, appliances and equipment for ongoing energy projects. This was stated in the prospects of development of Azerbaijan's economy in the ADB report "Asian Development Outlook 2013: Asia's Energy Challenge".
The deficit of the balance of services will increase due to the rising demand for imports of services for the energy sector.
"In 2014, the current account surplus will rise to 17 percent of GDP against the growth of production on the Azeri-Chirag-Guneshli fields. On the whole, the country's exports are expected to decline by 2.1 percent in 2013, and increase by 1.7 percent in 2014," according to a forecast of the Asian Development Bank.
ADB predicts maintaining the external debt of Azerbaijan at the level of seven percent of GDP in 2013-2014. The bank expects the country's foreign reserves to be maintained at the level of at least $42 billion, while fiscal policy will be more expansionary.
The bank forecasts that in 2013 Azerbaijan will experience a small budget deficit (at 1.1 percent of GDP in 2013 and 1.3 percent - in 2014).
"The growth of budget revenues are projected at 20 percent, while the expenditures - at 27 percent annually. Proceeds from the State Oil Fund of Azerbaijan will continue to provide about 60 percent of revenues. The bulk of government spending will be funded by capital investments and costs associated with the increase of wages, payment of compensation for Soviet deposits, social spending to support the cost of living standards," ADB reported.
According to the Bank, monetary policy will be adjusted to reflect inflation expectations, and the refinancing rate will help the growth of the money supply.
"The new regulations increasing the minimum level of capital of Azerbaijani banks are expected to encourage the consolidation of small banks and foreign investment; this may push the leading banks to diversify portfolios," according to the ADB report.
According to the decision of the Central Bank of Azerbaijan dated July 25, 2012, the minimum total capital of existing banks increased from the current 10 million manat to 50 million manat. The new requirement for the capitalization of banks comes into force in January 2014.
The official exchange rate on June 3 is 0.7846 AZN / USD.