Shah Deniz 2 to support sustained fiscal surpluses in Azerbaijan

Baku, Azerbaijan, July 20

By Leman Zeynalova – Trend:

The second phase for development of Azerbaijan’s giant Shah Deniz gas and condensate field will support sustained fiscal surpluses in the country, Trend reports citing Fitch Ratings.

“We expect a surge in gas production from the coming onstream of the Shah Deniz 2 gas field, and contained expenditure growth will support sustained fiscal surpluses at a forecast 3.7 percent of GDP in 2019 and 3.5 percent in 2020,” said Fitch, as it has affirmed Azerbaijan's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB+' with a Stable Outlook.

Fitch said higher average oil prices supported further strengthening of the fiscal position in 2018, with the government recording a consolidated fiscal surplus of 5.6 percent of GDP in 2018 (including the State Oil Fund of Azerbaijan, Sofaz), versus a 2.6 percent deficit for the current 'BB' median.

“The revised 2019 budget includes a package of social measures, including a rise in public sector wages, pensions and social benefits and debt-reducing measures for households, financed by re-allocation of spending from capital to social expenditure and efficiency measures. The revised budget complies with the fiscal rule adopted in 2018, which provides for caps on yearly consolidated expenditure growth and oil revenue spending, and a decline in non-oil deficit/non-oil GDP. The 2018 tax reform, which aims at reducing the shadow economy and broadening the tax base, could bolster employment and tax receipts in the medium term,” reads a report from Fitch.

The rating agency experts said that external guarantees account for 15.6 percent of GDP in 1Q19, a majority of which stem from the Southern Gas Corridor-related projects.

Further, the report shows that Azerbaijan's external balance sheet strengthened further in 2018, with Sofaz assets reaching $38.5 billion at end-2018 ($40 billion at end-1Q19) as the fund recorded a 7.7 percent of GDP surplus.

“Higher oil prices and healthy non-oil sector exports, notably from tourism, brought the current account surplus to 12.9 percent of GDP in 2018, compared with a deficit of 3.2% for the current 'BB' median. Increased government ownership in the country's largest oil field (ACG) following adoption of the new profit sharing agreement (PSA) will lead to an improvement in the primary income account, while a surge in gas production starting in 2019 will partly offset lower forecast oil prices and support a current account surplus over 9 percent of GDP in 2019-2020,” said Fitch.

Economic recovery is ongoing with growth reaching 1.4 percent in 2018, compared with a five-year average of 0.3 percent and a 'BB' median of 3 percent. Non-oil sector growth reached 1.8 percent, while the hydrocarbon sector expanded by 0.7 percent, supported by a 5.6 percent rise in gas production, according to the rating agency.

“We expect growth to pick up in 2019 to 2.7 percent as gas production ramps-up and the government social measures boost private consumption. However, diversification remains limited, with the oil sector accounting for 42 percent of GDP and 91 percent of good exports and 63 percent of fiscal receipts.”


---

Follow the author on Twitter: @Lyaman_Zeyn

Subscribe to Trend in Google News! Subscribe
Israel's annual inflation up 2.5 pct, highest in nearly decade
Israel's annual inflation up 2.5 pct, highest in nearly decade
Russia, Israel to coordinate efforts at UN to counter history revision
Russia, Israel to coordinate efforts at UN to counter history revision
Shekel gains ahead of September CPI reading
Shekel gains ahead of September CPI reading
Loading Bars
Latest
Earthquake hits southern Iran
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,681 more COVID-19 cases, 675 recoveries
Azerbaijani President Ilham Aliyev signs decree on raising social payments
Iran reveals COVID-19 data for October 16
Uzbekistan to privatize public park in Tashkent
Muslims all together sympathetic with Azerbaijan - Palestinian ambassador
Iran's exports to Kazakhstan up
SOCAR Georgia Gas opens tender on pickup trucks through operating lease
Turkish president and German chancellor holding talks in Istanbul
Novak does not rule out recurrence of energy crisis in Europe, urges its prevention
Azerbaijani official talks victims of Armenian attacks on Tartar during Second Karabakh War
Centuries needed to revive nature of Azerbaijan's Karabakh - minister
Azerbaijan raises electricity and gas prices
Restoration work in Azerbaijan’s liberated territories show positive trend – Kyrgyz ambassador
Over past 25-30 years, no country independently conducted such large-scale reconstruction in post-conflict period - aide to Azerbaijani president
Armenia must take serious and positive steps to open communications - Azerbaijani president's assistant (Exclusive)
Azerbaijan looks to sign document on demining liberated territories with France
Azerbaijan's Air Defense Units carrying out combat firing exercises (VIDEO)
Azerbaijan's Karabakh to be famous for its "smart cities" and agricultural products - Turkish ambassador
Iran boosts exports to Russia
Russia registers over 1,000 coronavirus deaths in 24 hours first since pandemic starts
Kazakh energy minister names reasons for shutdown of Pavlodar refinery
Iran sees increase in trade turnover with EAEU member states
Representatives of diplomatic corps view restoration work in liberated territories of Azerbaijan (PHOTO)
First plane with UN humanitarian aid for Afghanistan arrives in Uzbekistan
Iran records increase in load/unload operations in Amirabad port
Georgia and US to discuss co-op in Black Sea
Fuzuli Airport Granted International Status and Assigned IATA Code
Uzbekistan to fund startups in various sectors
U.S. lawmaker blames Boeing leaders for culture that led to crashes
Turkmenistan to purchase agricultural machinery from foreign manufacturers
Iran Energy Exchange shares data on sales of Iran’s Jam Petrochemical Company
Azerbaijan names gymnasts to perform at World Championships in Japan
During former occupation of Sugovushan, Armenia deprived vast lands of water - aide to Azerbaijani president (PHOTO)
Volume of loaded and unloaded cargo in Iran’s Noshahr Port down
Georgia shares data on COVID-19 cases for October 16
Kazakhstan boosts trade with Turkmenistan over 8M2021
Exports of steel manufacturers in Iran increase
Georgia, EU, and Turkey enter into "diagonal cumulation" agreement
Azerbaijani sees increase in oil prices
Iran raises ceiling on housing loans
Uzbekistan’s FEZ creates good basis for deepening co-op with Azerbaijan
Turkmenistan’s private enterprise eyes building dry cargo vessel
Trade turnover between Russia, US may hit record this year, says Deputy PM Overchuk
Iran to launch several shipping lines to Russia, Kazakhstan
Iran looks to improve transportation of goods from Khuzestan Province
Russia’s Korona Pay eyes expanding money transfers via Azerbaijan's mobile banking apps
Gas prices in Europe to remain high over next 6 months
Iranian currency rates for October 16
Turkmenistan's electric potential rises after commissioning new capacious power plants
Iran to increase fuel production
UK MP killing was terrorist incident, Met Police say
Representatives of diplomatic corps in Azerbaijan begin visit to Sugovushan
Czech Republic eyes to support improvement of Georgian air transport infrastructure
1,900 more COVID-19 cases reported in Kazakhstan
Biden says those who refuse to testify in Jan 6 probe should be prosecuted
ISIS claims responsibility for mosque attack in Afghan city of Kandahar
Fully vaccinated foreign visitors can enter U.S. starting on Nov. 8
China's Shenzhou-13 crewed spaceship docks with space station module
UK records more than 40,000 COVID cases for third day in a row
Biden says Clinton will be released ‘shortly’ from California hospital
Amazon-owned Twitch says source code exposed in last week's data breach
Israel's annual inflation up 2.5 pct, highest in nearly decade
Africa's COVID-19 cases surpass 8.41 mln: Africa CDC
US shares specific data on cybercrime with Russia, awaits its actions, White House says
Saudi Arabia appoints Al-Rabiah as new Hajj minister
Chronicles of Victory: President Ilham Aliyev interviewed by Turkish A Haber TV channel on October 16, 2020 (PHOTO/VIDEO)
Chronicles of Victory: October 16, 2020
Czech PM Babis pledges smooth power handover to opposition
UK MP dies after being stabbed at constituency meeting
China’s Shenzhou-13 manned spacecraft successfully reach orbit
Four migrants dead, 21 missing off Spanish coast
FIA approves schedule for Azerbaijan Grand Prix in 2022
COVID-19 kills 197 more Iranians over past 24 hours
Georgian FM meets Slovenian counterpart
Armenia trying to prepare ground for new provocations against Azerbaijan by spreading fake information - MoD
Azerbaijani FM discusses mine threat in liberated territories with French CNEMA delegates (PHOTO)
Azerbaijan lifts flight restrictions for number of countries
Azerbaijani President signs law "On Independence Day"
EBRD to allocate loan to Turkmen beverage company
Azerbaijan records decline in fixed capital revenues for 9M2021
Turkmenistan, WB talk new areas of co-op
Uzbek-Korean JV announces tender to buy clarifier
Gasoline prices in Georgia increase
Money transfers to Azerbaijan via Golden Crown service grow for 9M2021
Iran looking to develop renewable energy - SATBA
Azerbaijani MoD discusses mine clearing in liberated territories with French delegation (PHOTO)
Iran eyeing increase in trade with Spain
Export-oriented local Georgian company to get benefits within USAID program
Saudi Arabia to ease coronavirus curbs from Oct. 17
Russia, Venezuela developing secured messenger — Rostec
Kazatomprom to look for new ways to bolster nuclear energy for peaceful purposes
Turkmenistan discloses area allotted for sowing winter barley in Dashoguz region
Agreement with Azerbaijan on additional gas supplies aimed at ensuring Turkey's gas reserves – Erdogan
First container train on its way to Azerbaijan's Karabakh (PHOTO/VIDEO)
Uzbekneftegaz receives gas flow from well at Khojikazgan field
Kazakhstan to exempt Caspian oil exports from customs duties
Kazakhstan unveils data on trade with other EAEU states
Volume of financial assets of non-financial corporations in Georgia increases
All news