Weekly review of events in Azerbaijan's financial market

Weekly review of events in Azerbaijan's financial market

BAKU, Azerbaijan, August 1


The international rating agency Moody's confirmed Ba2 level of Azerbaijan's credit rating for the current week (27.07.2020-31.07.2020), Trend reports referring to Moody’s report data on Azerbaijan.

As the agency the credit profile of Azerbaijan (issuer rating Ba2) balances moderate wealth levels against the high volatility growth and the economy's (Ba3 rating) significant exposure to hydrocarbons.

Moody's also stressed, the country’s institutions and governance strength confirmed at “b2” level are balanced against gradually increasing monetary and fiscal policy credibility. The government's "a2" fiscal strength is underpinned by the country's strong net creditor position, as the size of sovereign wealth assets covers all of the government's direct debt and guarantees, notwithstanding the high share of foreign currency debt.

Besides, at the beginning of the week the monthly indicators of the Central Bank of Azerbaijan (CBA) on monetary-loan policy were published. Thus, in June, the bank lending volume in the country exceeded 14.1 billion manat ($8.2 billion), while the volume of problem loans decreased by 28.3 percent, to 1.06 billion manat ($620 million).

The total volume of deposits amounted to 22.5 billion manat ($13.2 billion) in Azerbaijan (increase by 8.3 percent. Around 46 percent or 3.5 billion manat ($2 billion) of all deposits in the country accounted for savings in the national currency, and the share of deposits in national currency in the country’s regions (except for Baku) exceeded 84 percent.

It was revealed that during the pandemic, Azerbaijan became more digitalized - the number of debit payment cards in the country spiked by 1.5 times in the first half of the year.

During the week, four more Azerbaijani banks published their financial reports - in the year the world economic recession began, the assets and liabilities of most banks expectedly decreased. Nevertheless, Muganbank increased the deposit portfolio for individuals by 1.5 times; and AFB Bank - its loan portfolio that has grown due to business loans by 24.6 percent.

In the field of taxes, this week the Cabinet of Ministers of Azerbaijan approved the "Criteria of a risky taxpayer, including risky transactions", according to which a taxpayer is now considered risky if he carries out risky operations, does not have a warehouse corresponding to the size of stored products, and imports a volume of goods three times larger than its turnover.

Besides, this week, the Central Bank of Azerbaijan (CBA) lowered the discount rate by 0.25 percent - to 6.75 percent, and also kept the inflation forecast at 3.3 percent. During a press conference, the chairman of CBA’s board disclosed the volume of strategic foreign exchange reserves of Azerbaijan ($ 51.5 billion). Earlier the same day Fitch forecasted the strategic foreign exchange reserves of Azerbaijan to be equal to $38.3 billion by the end of 2020.

In addition, the current week was marked by a record growth in the price of gold to the Azerbaijani manat (3,335.766 manat or $1,962.22 per ounce), and exceeding of the euro rate by 2 manat or $1.18 mark.

Eldar Janashvili, Department of Economy at Trend News Agency

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