BAKU, Azerbaijan, Nov. 10
By Zeyni Jafarov - Trend:
The Azerbaijani government has prepared a large program to support the non-oil and gas sector and vulnerable social groups, in view of the fact that the Azerbaijani economy has suffered from two shocks: the COVID-19 pandemic and a sharp drop in oil prices, Trend reports citing the report of the European Bank for Reconstruction and Development (EBRD).
According to the bank, the support program also includes subsidizing wages, various tax incentives, financial support for microentrepreneurs, issuing government guarantees on new loans with subsidized interest rates to enterprises in the most affected sectors and subsidizing interest rates on existing loan portfolios of companies operating in the districts affected by the coronavirus pandemic.
The EBRD said that after strong growth in early 2020, production in the non-oil sector turned negative after the introduction of restrictive measures in March due to COVID-19, adding that production in the non-oil and gas sector hit a low in June this year and then slowly recovered.
“With more than a third of GDP, roughly two-thirds of government revenues and 90 percent of exports falls on hydrocarbon sector. The fall in oil prices in addition to the crisis caused by the pandemic, is causing significant damage to the economy,” said the EBRD’s report.
According to preliminary data, GDP for the first nine months of 2020 declined by 3.9 percent on an annualized basis, while the non-oil and gas sector contracted by 2.4 percent. Capital expenditures declined by 3.8 percent year on year, while nominal household incomes remained unchanged.
“Along with this, the Central Bank of Azerbaijan (CBA) has taken a set of measures to ease the regulatory burden and support the banking and insurance sectors, as well as capital market participants. The CBA lowered capital requirements and limited dividend payments until September 2020,” the report noted.
To support vulnerable groups, the state expanded unemployment benefits and introduced system of preferential mortgage loans, the EBRD added.