Payment balance of Azerbaijan: Account surplus of Azerbaijan's oil and gas sector covers deficit in non-oil sector

Analysis of the payments balance by sector showed that, as in previous years, in January-September 2010, foreign economic operations in the petroleum sector had a black surplus, while non-oil sector - red. In the first quarter, the black ink on oil and gas sector reached $15.3 billion. Incomes from oil and gas sector are formed mainly by exports of crude oil and natural gas and foreign capital attracted to this sector. Payments for this sector are carried out as a result of profit and repatriation of investment, imports of equipment and services.

Key indicators of payments balance of Azerbaijan

mln USD

Key indicators of payments balance

January-September 2009

January-September 2010

I. Balance of current account

7090.9

11977.1

Foreign trade balance

10068.5

15417.7

Balance of services

-917.7

-1152.0

Balance of incomes

-2538.0

-2685.6

- Repatriation of investment

-2340.0

-2216.1

Balance of current transfers

478.1

397.0

II. Balance of capital account and finance

-6156.7

-3673.0

Direct investments

96.1

325.8

- to Azerbaijan's economy

2104.9

2271.9

- to foreign economy

-225.9

-170.4

- repatriation of investments

-1782.9

-1775.7

Loans and other investments

-6252.8

-3998.8

III. Payments balance   (change of reserve assets of country)

934.2

8304.1

Account of current operations

The Central Bank of Azerbaijan stated 68.9 percent annualized growth in current account surplus of payment balance. Thus, the current account surplus in January-September 2010 amounted to $12 billion compared to $7.1 billion a year earlier. In this case, the current account surplus of oil and gas sector amounted to $15.4 billion, which completely covers the deficit in non-oil sector by $3.4 billion.

Foreign trade balance

Total foreign trade turnover amounted to $24.7 billion and black ink in foreign trade - $15.4 billion in January-September 2010. In addition, goods worth $4.66 billion imported and export operations - $20.08 billion.

During the report period, trade relations were established with 140 countries. While 12 percent of turnover fell to the transactions with the CIS countries and 88 percent - other foreign countries. Intensive trade relations were observed with Italy, U.S., France, Israel, Turkey, Russia, UK, Ukraine, Indonesia and Malaysia. 70.6 percent of the country's export-import operations fell to these countries.

Main trade partners of Azerbaijan in January-September 2010

mln. USD

Товарооборот

Экспорт

Импорт

Сальдо

Italy

5776

5701

75

+5626

USA

2154

1988

166

+1822

France

1776

1696

80

+1616

Israel

1572

1516

56

+1460

Russia

1337

589

748

-159

Turkey

1233

753

480

+273

Great Britain

1111

887

224

+663

Ukraine

994

682

312

+370

Indonesia

852

850

2

+848

Malaysia

667

637

30

+607

Others

7271

4781

2490

+2291

In total

24743

20080

4663

+15417

including

CIS countries

2962

1613

1349

+264

Other states

21781

18467

3314

+15153

Exports of goods. During January-September, Azerbaijan exported products totaling 20.1 billion dollars. The share of oil products made up 95.2 percent of total exports.

Thus, during the reported period, oil exports amounted to 18.4 billion. Of the total amount of exported oil products, the share of oil products accounted for $1164.6 million, and crude oil exported from the country - $17.3 billion. Azerbaijan International Operating Company (AIOC) produced oil products totaling $16.3 billion. Other companies exported oil worth $943.6 billion, of which $87.6 million accounted for gas condensate from Shah Deniz, and $855.9 million - SOCAR (State Oil Company of Azerbaijan).

The total amount of exports in non-oil sector accounted for $974.5 million.

Structure of export

January-September 2009

January-September 2010

Amount, mln USD

Specific weight, in percent

Amount, mln USD

Specific weight, in percent

Export in total

14790.1

100.0

20080.2

100.0

1. Fuel resources  

14180.0

95.9

19301.1

96.1

- oil and gas

14018.0

94.8

19105.6

95.1

- other resources

162.0

1.1

195.5

1.0

2. Machines and equipment

214.8

1.5

287.2

1.4

3. Consumer goods

370.8

2.4

479.3

2.4

4. Other products

24.5

0.2

12.6

0.,1

Imports of goods. During January-September, imports of goods into the country amounted to $4.7 billion. The total cost of imported consumer goods amounted to $2105.2 million, of which $727.2 million - food products.

Structure of import

January-September 2009

January-September 2010

Amount, mln USD

Specific weight, in percent

Amount, mln USD

Specific weight, in percent

Import in total

4721.6

100.0

4662.5

100.0

1. Consumer goods

2020.1

42.8

2105.2

45.2

- food products

609.9

12.9

727.2

15.6

- other  

1410.2

29.9

1378.0

29.6

2. investment products

564.3

12.0

477.3

10.3

- international oil and gas consortiums

327.5

7.0

371.4

8.0

- others

236.8

5.0

105.9

2.3

3. other products

2137.2

45.2

2080.0

44.5

Balance of services.

In January-September 2010, the service took one of the leading positions in foreign economic relations of Azerbaijan. The total amount of mutual cooperation in this sphere amounted to $4151.4 million. Of these services, $2651.7 million was provided by non-residents to the residents of Azerbaijan, and Azerbaijani residents provided services in amount of $1499.7mln to residents of foreign countries. Thus, the balance of services was negative and amounted to $1152 million. About 25.7 percent of services fall on transport sector.

In January-September the tourism services provided to foreigners visiting Azerbaijan totaled $435.8 million. 35.6 percent of these services were provided to non-residents who made business visits to Azerbaijan.

In turn, the tourism services provided to residents of Azerbaijan by residents of foreign countries doubled compared to the same period of last year and totaled $496.7 million. Of these, 76.6 percent of funds was spent on personal services.

Incomes balance.

According to payments balance, the total turnover of payments and incomes in January-September 2010 amounted to $3287.4 million, of which 90.8 percent ($2986.5 million) accounted for payments by Azerbaijan.

The bulk of payments ($2246.1 million) was made through the repatriation of income (oil income) by foreign investors, the Azerbaijan International Operating Consortium (AIOC). $87.7 million fell on salaries of non-residents, $139.2 million on interest payments on loans, including oil and gas sector.

Balance of current payments.

The total amount of operations carried out with foreign countries through transfers amounted to $1.6 billion.

Of general revenues on current transfers, 94.2 percent account for the money transfers by foreign individuals, 2.2 percent of the cost of humanitarian goods imported into the country, 3.6 percent from other income. In general, the black ink from current transfers amounted to $397.05 million.

Balance of capital account and finance

The total amount of foreign capital attracted in Azerbaijan's economy in January-September 2010 amounted to $5.7 billion, an increase of 1.4 times compared to the same period of last year. This figure is mainly formed through direct investments and foreign loans.

Structure to attract foreign capital

January-September 2009

January-September 2010

Amount, mln USD

Specific weight, in percent

Amount, mln USD

Specific weight, in percent

Direct investments

2104.9

51.2

2274.4

40.0

- oil and gas sector

1583.0

38.5

1754.7

30.9

- other sector

521.9

12.7

519.7

9.1

Loans and other investments

2005.0

48.8

3413.7

60.0

-loans under state guarantee

431.7

10.5

499.1

8.8

-loans without state guarantee

580.1

14.1

1887.6

33.2

-oil and gas sector

35.0

0.8

358.4

6.3

-banks

396.8

9.7

1336.2

23.5

-others

148.3

3.6

193.0

3.4

-other investments

993.2

24.2

1027.0

18.0

In total

4109.9

100.0

5688.1

100.0

Direct investments

Total direct investments in the economy amounted to $2274.4 million, where the share of oil and gas sector was 77.15 percent. These investments were used to finance the construction works on the territory of Azerbaijan within oil and gas projects by BP Exploration (Shah Deniz) Ltd and the AIOC in Azeri-Chirag-Guneshli.

According to the Central Bank of Azerbaijan, the amount of direct investments attracted to the non-oil sector amounted to $519.7 million - 22.85 percent of the total direct investments attracted in the country.

loans and other investments

According to payments balance, in the first nine months of 2010 the share of direct state and state-guaranteed loans, loans attracted in private sector, deposits and other investments accounted for 60 percent of total foreign investment. They totaled $3413.7 dollars, which is 1.7 times more than 2009.

The growth of this index was mainly due to an increase in demand for loans from the oil and gas sector and banks. Loans attracted by state and under the state guarantee accounted for 20.9 percent ($499.1 million). The share of unsecured loans made up $1887.6 million (79.1 percent). Of these, $358.4 million accounted for loans borrowed from international financial institutions to finance the international oil and gas contracts.

Of unsecured loans, $1336.2 million were attracted by banks, $193 million - joint ventures and firms.

Reserve assets

Payments balance surplus for the third quarter of the year has allowed to accumulate $8304.12 million in reserve assets, in addition, whereas a year earlier accumulation of reserve assets amounted to only $934.2 million.

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