IMF forecast: Azerbaijan needs oil prices to be at least $60/barrel

Baku, Azerbaijan, Oct.23

By Anvar Mammadov - Trend:

The international Monetary Fund (IMF) has defined the fiscal breakeven oil price for Azerbaijan.

A report issued by the IMF said that the breakeven oil price for Azerbaijan will be $60 per barrel in 2016, while it is $75 in 2015 and exceeded $90 per barrel in 2014.

For Kazakhstan, it is over $80 per barrel for 2016, about $90 per barrel - in 2015 and around $70 per barrel - 2014.

Turkmenistan has the best indices. The IMF forecasts that the breakeven oil prices for Turkmenistan will exceed $40 per barrel in 2016. The forecast for 2015 is $45 per barrel, while it stood at $50 per barrel in 2014.

Only in Turkmenistan, the fiscal breakeven oil prices are lower than the forecasted oil prices for late 2015 and 2016 ($52 and $55 per barrel, respectively), according to the IMF experts.

The IMF report said that countercyclical fiscal policies have helped many CCA countries mitigate the slowdown in economic activity in 2015.

"Fiscal deficits were allowed to rise in most of them, as overall expenditure (particularly from public investment) increased or held steady, while revenue contracted from lower oil prices in oil exporters and weaker economic activity across the region," said the report.

Azerbaijan and Turkmenistan are exceptions, with projected declines in public spending in 2015, as these countries have already started to consolidate their non-oil fiscal positions in response to lower oil prices, said IMF.

Revenue gains from exchange rate adjustments also helped these countries, along with Kazakhstan, to reduce the necessary fiscal adjustment, the report said.

In the oil importers, improving the quality of public expenditure and consolidating the fiscal balance in the medium term, while preserving capital and social expenditure, will help to ensure that debt remains sustainable and, at the same time, safeguard growth and make it more inclusive, according to IMF.

On average, public debt in the oil importers is projected to increase by about 7 percentage points of GDP from the previous year to above 45 percent of GDP, reaching nearly 60 percent in the Kyrgyzstan and approaching 50 percent in Armenia, said the report.

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Follow the author on Twitter: @Anvar_Mammadov

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