Payment balance of Azerbaijan: Year began as usual

Analysis of the payments balance of Azerbaijan upon sectors indicated that like previous years, in the first quarter of 2011 the foreign economic operations in the oil and gas sector had black ink, while in non-oil sector - red ink. According to payment balance provided by the Central Bank of Azerbaijan, in January-March 2011 the black ink in the oil sector amounted to $6.3 billion. Incomes from oil and gas sector are formed mainly at the expense of exports of crude oil and natural gas and foreign capital attracted into this sector. Payments for this sector are carried out as a result of profit and repatriation of investment, imports of equipment and services.

Main indicators of Azerbaijan's payment balance

mln USD

Account of current operations

The Central Bank of Azerbaijan (CBA) mentioned 23.7 percent growth in the current account surplus of payments balance in the first quarter of this year compared to 47.8 percent in 2010. Thus, the current account surplus for I quarter of 2011 amounted to $4.8 billion compared to $3.9 billion for I quarter of 2010. The current account surplus of the oil and gas sector is $6.3 billion, which fully covers the current $1.5 -billion account deficit of the non-oil sector.

Foreign trade balance

The total foreign trade turnover amounted to $10.5 billion, with the black-ink foreign trade surplus reaching $6.6 billion in the 1st quarter. In addition, goods worth $2 billion were imported and export operations amounted to $8.5 billion.

During the reporting period, trade relations were established with 115 countries. Roughly 14.6 percent of the turnover fell to transactions with CIS countries and 85.4 percent fell to other foreign countries. Intensive trade relations were observed with Italy, the United States, France, Turkey, Russia, Ukraine, UK, Japan, Belarus and Malaysia. Some 77.3 percent of the country's export and import operations fell to these countries.

Main trade partners of Azerbaijan I quarter of 2010

mln USD

Export : Azerbaijan exported oil products worth $7.8 billion abroad in I quarter of 2011, according to the Central Bank of Azerbaijan (CBA) payment balance. The share of oil and gas products in the structure of exported products hit 95.9 percent.

Some $365 million of the total volume of exported oil products accounted for oil refinery products, while the country exported oil worth $7.5 billion. The Azerbaijan International Operating Company (AIOC) produced oil in amount of $7.1 billion of the total volume of the exported products. Other enterprises exported oil worth $372.4 million, $12.6 million of which accounted for condensate from the Shah Deniz field, while $359.8 million accounted for the State Oil Company of Azerbaijan (SOCAR).

Total cost of exports accounting for non-oil sector hit $346.6 million increasing by 0.5 percent.

The total cost of exported products amounted to $8.5 billion.

Structure of export

Imports . In I quarter of 2010, import of goods to the country amounted to $2 billion. The total cost of imported consumer goods amounted to $791.3 million, of which $317.9 million - the food products.

Structure of import

Balance of services.

In I quarter of 2011, 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 $1.575.8 billion. Of these services, $1.049.2 billion was provided by non-residents to the residents of Azerbaijan, and Azerbaijani residents provided services in amount of $526.6 million to residents of foreign countries. Thus, the balance of services was negative and amounted to $522.6 million.

In the turnover of services, 21 percent accounted for transportation services. Total transportation services account for $331.7 million. Of these, 47.7 percent fall on the Azerbaijani residents' use of the transit systems in foreign countries. And the cost of transport services rendered by residents of Azerbaijani to nonresidents in the country was $173.6 million.

In I quarter the tourism services provided to foreigners visiting Azerbaijan totaled $191.2 million. 27.8 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 $257 million. Of these, 69.3 percent of funds was spent on personal services.

Balance of incomes

According to balance of payments, the total turnover of payments and receipts in I quarter of 2011 amounted to $1.699.7 billion, of which 89.6 percent ($1.523.4 billion) accounted for the payment of Azerbaijan.

The bulk of payments ($1.311.7 billion) was made due to the repatriation of income (via oil) of foreign investors, the Azerbaijan International Operating Consortium (AIOC), $29.3 million accounted for the salaries of non-residents, $34.6 million for interest payments on loans used, including oil and gas sector.

Balance of current payments

The total amount of operations carried out with foreign countries through transfers amounted to $629.5 million, of which 61.2 percent accounts for incomes to the country.

Of total revenues on current transfers, 95.3 percent account for the money transfers by foreign individuals, 1.9 percent of the cost of humanitarian goods imported into the country, 2.8 percent from other income. In general, the black ink from current transfers amounted to $141.5 million.

Balance of capital account and finance

The total amount of foreign capital attracted in Azerbaijan's economy in the 1^st quarter of 2011 amounted to $1.7 billion, a decrease of 8.7 percent. This figure is mainly formed through direct investments and foreign loans.

Structure to attract foreign capital

Direct investments

Total direct investments in the economy amounted to $819.9 million, where the share of oil and gas sector was 84.9 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 $123.7 million - 15.1 percent of the total direct investments attracted in the country.

Loans and other investments

According to payments balance, in the first quarter of 2011 the share of direct state and state-guaranteed loans, loans attracted in private sector, deposits and other investments accounted for 21.9 percent of total foreign investment. They totaled $884.9 dollars, which is 23.8 percent more than 2010.

Loans attracted by state and under the state guarantee accounted for 60 percent ($447.3 million). The share of unsecured loans made up $298.3 million (40 percent). Of these, $141.7 million was attracted by the banks, $1.1 million by oil and gas sector, $155.5 million by other enterprises and companies.

Of the total amount of earlier attracted loans, $199.9 million was repaid. 58.2 percent ($116.4 million) of repaid loans accounted for the banking system, 18.2 percent ($36.4 million) - state and state-guarantee loans, 2.3 percent ($4.6 million) - oil and gas sector, 21.3 percent ($42.5 million) - other enterprises and companies.

Reserve assets

Payments balance surplus for the first quarter of the year has allowed to accumulate $3.093.7 billion in reserve assets in addition.

Payment balance of Azerbaijan for I quarter of 2011, ths dollar