BAKU, Azerbaijan, Nov. 10
By Fidan Babayeva - Trend:
Azerbaijan's macroeconomy remains at stable level, the European Bank for Reconstruction and Development (EBRD), Trend reports referring to the bank.
According to the bank, amid growing demand for foreign currency, the State Oil Fund of Azerbaijan (SOFAZ) sold $6.2 billion to local banks until October 2020, maintaining the stability of the currency.
"The actual binding of the currency maintained low inflation - 2.6 percent in September 2020. The low inflationary pressures allowed the Central Bank of Azerbaijan to continue to reduce the refinancing rate, which decreased in September 2020 by 100 basis points to 6.5 percent. However, the positive balance of foreign and fiscal policy becomes negative against the background of a significant decline in oil revenues," the bank said.
The anti-crisis response and the budgetary financing deficit were financed from SOFAZ reserves. The authorities responded with an economic and social support package of 4.3 percent of GDP, the bank noted.
“Higher spending and lower tax revenues are expected to push the budget deficit to 6.3 percent of GDP. However, the country prefers to rely on the sovereign wealth fund rather than external funding. In the first half of 2020, SOFAZ and the central bank combined assets of nearly $50 billion, which is more than the projected GDP of the country," added the bank.
EBRD is a leading investor in Azerbaijan which has so far invested about 3.3 billion euro in the country’s various economic sectors: energy, infrastructure, banking, industry and commerce.
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