BAKU, Azerbaijan, Oct. 26
By Zeyni Jafarov - Trend:
Taking into account that presently the level of dollarization of the loan portfolio of Azerbaijani banks is 32 percent, risks aimed at the stability of the financial sector may increase pressure on the regime of Azerbaijan's exchange rate, Trend reports citing the report of the S&P Global Ratings international rating agency.
The statement predicts that Azerbaijan will support the peg of the manat against the USD. However, the manat remains under pressure amid volatility in oil prices and the fall in prices of currencies of Azerbaijan's main trading partners.
The agency also noted that if the conversion of residents' deposits into dollars accelerates and the outflow of dollar deposits from banks increases, the short-term liquidity of foreign currency in the banking system may be reduced.
However, there are still no facts of growth in the conversion of deposits into foreign currency or the withdrawal of deposits into the banking system.
S&P Global Ratings noted that in conditions of escalating hostilities, Azerbaijan's budget indicators may worsen as a result of an increase in budget spending on defense and on the restoration of damaged civilian infrastructure.
So, taking into account the risks, within the baseline scenario, it is assumed that the budget of Azerbaijan will be executed with a deficit of 6.5 percent this year and 1.5 percent in 2021.