BAKU, Azerbaijan, Dec. 27
By Nazrin Israfilova – Trend:
The International Monetary Fund reported this week that while fiscal policy in Azerbaijan has been suitably relaxed during the COVID-19 pandemic, growth-friendly fiscal consolidation is set to begin in 2022.
According to the report, the adaptive fiscal position in 2021 is appropriate. In the event of adverse shocks, automatic stabilizers should be allowed to operate and additional targeted budget support should be provided, if necessary, within the available fiscal space. Oil price windfalls that exceed budgeted levels should be retained.
IMF experts believe that consolidation in Azerbaijan should begin in 2022 and continue in the long term in order to gradually achieve a significant reduction in the primary non-oil deficit.
Also, this week it became known that negotiations between the Central Bank of Turkey and the relevant departments of Azerbaijan and the UAE to ensure a possible line of currency swaps are being completed, and one deal is likely to be concluded by the end of the year.
In addition, it was reported that the net profit of the banking sector in Azerbaijan in 11M2021 increased by 66 million manats ($38.8 million), or 12.04 percent compared to the same period last year - to 614.1 million manats ($361.4 million).
Net interest income of Azerbaijani banks increased over the year by 15 million manats ($8.8 million), or 12.09 percent - up to 1.39 billion manats ($818 million) and was formed at the expense of interest income, of which 1.54 billion manats ($906.3 million) accounted for on interest on loans (an increase of 11.17 percent compared to the same period in 2020) and related expenses in the amount of 490.9 million manats ($289 million) - an increase of 8.79 percent.
The Central Bank of Azerbaijan also reported that in 11M2021, the total assets of the country's banks amounted to 35.604 billion manats ($21 billion), total liabilities - 30.632 billion manats ($18 billion), and the balance capital - 4.972 billion manats ($2.925 billion).
Since the beginning of the year, assets and liabilities of the banking sector have grown by 11.1 and 12 percent, respectively. According to the regulator, the aggregate balance sheet capital of banks in 11M2021 increased by 5.8 percent compared to the same period in 2020.
The loan portfolio of Azerbaijani banks in November 2021 increased by 1.8 percent, or 284.7 million manats ($167.5 million) compared to October - up to 16.282 billion manats ($9.6 billion).
In general, since the beginning of the year, the banks' loan portfolio, which accounted for 46 percent of their assets, has grown by 15 percent. The share of overdue loans of banks in 11M2021 decreased by 1.4 percent compared to the beginning of the year - to 4.7 percent, as well as by 1.6 percent - compared to the same period last year and by 2.7 percent - compared to with an annual average of 2020.
According to the Central Bank, Azerbaijani banks during the reporting period increased the issuance of consumer loans by 20.2 percent compared to the beginning of the year - up to 4.4 billion manats ($2.6 biilion).
Also, Azerbaijani banks increased the issuance of business loans by 12.3 percent compared with the indicator at the beginning of the year - up to 9.52 billion manats ($5.6 billion).
Moreover, the Central Bank reported that in 11M2021, the number of payment cards in Azerbaijan increased by 185,000, or 18.8 percent compared to the same period last year and reached 10.858 million against 10.673 million a year earlier. Debit cards rose by 1.43 million year-on-year, or 17.7 percent.
The number of credit cards increased over the year by 27.3 percent - from 1.07 million to 1.36 million. The number of ATMs operating in this period in Azerbaijan amounted to 2,882, including 1,527 in Baku, 1,355 in other cities and regions of the country. The number of ATMs compared to the same period in 2020 increased by 194, or 7.2 percent. The number of POS terminals in the country has reached 60,797, of which 40,450 are installed in Baku, 20,347 - in other cities and regions of Azerbaijan. This indicator on an annualized basis increased by 3,841, or 6.7 percent.
In addition, according to the regulator, in 11M2021, problem loans in Azerbaijani banks decreased by 14.89 percent compared to the same period last year - up to 786.3 million manats ($462.7 million).
During this period, the number of client accounts in Azerbaijani banks increased by 4.26 million, or 20.14 percent compared to the same period last year - from 21.14 million to 25.4 million accounts.
The regulator also reported that in 11M2021 in Azerbaijan, the money supply in manat terms (M2) increased by 4.13 billion manats ($2.4 billion), or 22.18 percent compared to the same period last year - from up to 22.74 billion manats ($13.4 billion).
The cash money supply in circulation (M0) increased over the year by 691 million manats ($406.6 million), or 6.7 percent - up to 10.8 billion manats, the expanded money supply (M3) - by 5.884 billion manats ($3.5 billion), or by 21.67 percent - up to 33.03 billion manats ($19.4 billion) against 27.14 billion manats ($16 billion) a year earlier.
The money supply for transactions (M1) for the year increased by 3.28 billion manats ($1.9 billion), or by 20.21 percent - up to 19.51 billion manats ($11.5 billion).
According to the Central Bank of Azerbaijan, loans were issued in Baku for 12.73 billion manats ($7.5 billion), which is 3.5 times higher than in the regions.
During this period, Azerbaijani banks increased the issuance of mortgage loans by 16.7 percent compared with the indicator at the beginning of the year - up to 2.35 billion manats ($1.4 billion). On an annualized basis, this figure increased by 17.9 percent.
In addition, the Central Bank reported that in 11M2021, the volume of loans issued to the transport and communications sector in Azerbaijan decreased on an annualized basis by 13.4 percent, or 114.9 million manats ($67.6 million) - up to 743 million manats ($437.2 million).
At the same time, the volume of loans issued in the real estate sector increased by 16.57 percent, or 346 million manats ($203.6 million) compared to the same period last year - up to 2.434 billion manats ($1.4 billion).
The volume of loans issued in Azerbaijan in the industry and manufacturing sector decreased by 450.6 million manats ($265.1 million), or 32.77 percent compared to the same period last year - up to 924.6 million manats ($544.1 million).
The volume of loans issued by banks to the construction sector increased by 438.6 million manats ($258.1 million), or 91.87 percent compared to the same period last year - up to 916 million manats ($539 million).
The volume of loans issued in the agricultural sector increased on an annualized basis by 24.7 million manats ($14.5 million), or 4.46 percent - up to 578.6 million manats ($340.5 million).