Weekly review of main events of Azerbaijani financial market

Finance 16 January 2022 15:44 (UTC +04:00)
Weekly review of main events of Azerbaijani financial market

BAKU, Azerbaijan, Jan. 16

By Nazrin Israfilova - Trend:

The Central Bank of Azerbaijan reported during the outgoing week that the monetary base as of December 30, 2021 amounted to 17.9 billion manat ($10.5 billion) in Azerbaijan, which is by 25.6 percent or 3.6 billion manat ($2.1 billion) more than as of December 1, 2020.

According to the CBA, the monetary base also grew by 32.2 percent year on year.

The information was spread during the outgoing week that the foreign exchange reserves of the CBA amounted to $7.07 billion as of December 30, 2021, which is by 0.8 percent or $0.05 billion more than in the previous month and by 11.08 percent more than in early 2021.

According to the CBA, the official foreign exchange reserves amounted to $6.4 billion as of early 2021.

The information was spread during the outgoing week that the current portfolio of projects of the European Bank for Reconstruction and Development (EBRD) in Azerbaijan is estimated at 801 million euros as of early 2022.

The loan portfolio has been designed for the implementation of 35 programs.

The main part of the project portfolio (88 percent or 709 million euros) accounted for investments in sustainable infrastructure, nine percent or 73 million euros - for investments in industry, trade and agriculture, while three percent or 20 million euros for investments in financial institutions.

In general, the bank has invested over 3.2 billion euros in Azerbaijan for 178 projects.

EBRD issued loans in the amount of 17 million euros in 2021 for the implementation of six projects in Azerbaijan. The loans worth 857 million euros were issued for implementation of 34 projects in the public and private sectors of the country over the past four years.

So far, the bank has invested about 3.2 billion euros in Azerbaijan for 175 projects.

EBRD boosted the total volume of investments in Azerbaijan’s economy in 2021.

According to the bank, this indicator amounted to 34 million euro, up by two times on annual basis.

The loan portfolio has been designed for the implementation of eight programs (against six programs worth 17 million euro in 2020).

The information was spread during the outgoing week that the International Monetary Fund (IMF) is not envisaging any significant impact of the depreciation of Turkish lira on Azerbaijan’s financial system.

The Turkish lira rate began to fall again after a sharp increase in late December 2021. The Turkish currency was traded at 13.83TL per $1 during the outgoing week.

IMF forecasts the economic growth in Azerbaijan in 2022 at 2.3 percent.

As for the results of activity of the IMF Regional Capacity Development Center for the Caucasus, Central Asia, and Mongolia, the financial institution said that it has been very active in the region, including Azerbaijan.

“In addition to regional workshops and webinars, a number of technical assistance missions to Azerbaijan have been initiated, including on banking supervision, macro-fiscal frameworks, and government finance statistics,” IMF said. “In addition to our annual Article IV consultation, the IMF is rendering technical assistance to Azerbaijan to help strengthen economic institutions and economic decision making. As mentioned above, there are several ongoing projects in banking supervision, fiscal management and statistics.”

Azerbaijan’s real GDP growth is expected to stand at 3.1 percent and 2.7 percent in 2022 and 2023, respectively, the World Bank (WB) said during the outgoing week.

In its June forecast, WB estimated these figures at 3.9 percent and 3.6 percent.

The country’s GDP grew by 5 percent as of 2021, as compared to a decrease of 4.3 percent in 2020, says the World Bank.

“In Azerbaijan, growth is anticipated to decelerate over the forecast horizon but remain above its 2010-2019 average rate, supported by an expansion in non-energy sectors, rising public investment, and stable energy sector growth in line with OPEC+ quotas and higher natural gas production,” reads the WB’s Global Economic Prospects report.

The information was spread during the outgoing week that the total volume of securities trading at the Baku Stock Exchange (BSE) amounted to 15.3 billion manat ($9 billion) in 2021.

The total trading volume has increased by 19 percent, repo transactions – by 235 percent, with other corporate securities, excluding mortgage bonds – by 245 percent, and trading of these corporate securities in the secondary market has risen by 200 percent compared to the same period of 2021.

On the last trading day of December 2021, the capitalization of the Baku Stock Exchange increased by 12 percent compared to the beginning of the year and amounted to 4.4 billion manat ($2.5 billion).

The information was spread during the outgoing week that the Azerbaijan Entrepreneurship Development Fund cooperated with 44 authorized credit institutions in 2021.

Some 1,902 projects were financed upon the concessional lending in 2021.

Among five authorized credit organizations of the fund which issued the biggest number of loans in 2021 were:

- Unibank OJSC - 451

- Bank Respublika OJSC - 444

- AccessBank CJSC - 324

- Aqrarkredit CJSC - 216

- Rabitabank OJSC - 96

The information was spread during the outgoing week that the amendments have been made to the Tax Code of Azerbaijan to strengthen tax control and ensure transparency in the conduct of settlements.

The amendments envisage stimulating business activities, expanding the tax base, reducing the financial and tax burden through social payments, as well as improving accounting, taxation and control mechanisms.

One of the important amendments to the Tax Code is due to the fact that from January 1, 2022, when making a payment transaction between taxpayers, a payment order submitted to a bank or other persons carrying out banking transactions must contain information about specific details in the payment purpose.

Thus, taxpayers are obliged to provide information on specific details of payment orders for the transfer of goods, works and services received, as well as on debts and advance payments received by taxpayers. In case of non-fulfillment of these obligations, the Tax Code provides for sanctions.

So, according to the service, taxpayers must submit information containing the number of the e-invoice to which payment belongs, the series and number of the cargo customs declaration (CCD) or a short import declaration on foreign economic activity, the date and number of the invoice for the purchase of services.

Moreover, the information must contain advance payment or the date and number of the agreement or annex to the agreement between the parties, the date and number of the loan agreement concluded between the parties, or the date and number of the request for debt repayment.

A taxpayer who doesn’t indicate or distort the abovementioned information in a payment order is subject to a financial sanction in the amount of 100 manat ($58.8) for each such payment order.