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

Main indicators of payment balance

I quarter of 2010

I quarter of 2011

I. Balance of current account

3902.1

4826.0

Foreign trade balance

5040.6

6554.2

Balance of services

-416.7

-522.6

Balance of incomes

-795.4

-1347.1

- Repatriation of investments

-685.3

-1311.7

Balance of current transfers

73.6

141.5

II. Balance of capital flow

-1329.2

-1732.3

Direct investments

46.9

77.1

- in Azerbaijan ' s economy

704.7

819.9

- in foreign economy

-47.2

-24.9

- Repatriation of investments

-610.6

-717.9

Loans and other investments

-1376.1

-1809.4

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

2572.9

3093.7

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

Trade turnover

Export

Import

Balance

Italy

1868

1825

43

+1782

USA

1249

1126

123

+1003

UK

1231

1162

69

+1093

France

903

817

86

+731

Turkey

702

462

240

+222

Russia

654

298

356

-58

Japan

512

471

41

+430

Belarus

377

362

15

+347

Ukraine

328

197

131

+66

Malaysia

326

322

4

+318

Others

2388

1504

884

+620

In total

10538

8546

1992

+6554

Including

CIS countries

1533

919

614

+305

Other states

9005

7627

1378

+6249

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

I quarter of 2010

I quarter of 2011

Amount , mln . USD

Specific weight , %

Amount , mln . USD

Specific weight , %

Export in total

6258,4

100.0

8546.1

100.0

1. Fuel resources

5979.8

95.5

8330.5

97.5

- oil and gas

5913.6

94.5

8199.6

95,9

- other resources

66.2

1.0

130.9

1.6

2. Machine and equipment

129.3

2.1

45,6

0,5

3. Consumer goods

148.0

2.4

167,6

2.0

4. Other goods

1.3

-

2,4

-

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

I quarter of 2010

I quarter of 2011

Amount , mln . USD

Specific weight , %

Amount , mln . USD

Specific weight , %

Import in total

1217.8

100.0

1991.9

100.0

1. Consumer goods

617.1

50,7

791.3

39,8

- food products

226,1

18,6

317,9

16,0

- other

391,0

32,1

473,4

23,8

2. Investment goods

117,4

9,6

142,4

7,1

- international oil and gas consortiums

76,9

6.3

131,4

6,6

- other

40,5

3,3

11,0

0,5

3. Other goods

483,3

39,7

1058,2

53,1

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 1st 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

2010, I quarter

2011, I quarter

Amount , mln USD

Specific weight, in percent

Amount , mln USD

Specific weight, in percent

Direct investments

704,7

37,8

819,9

48,1

- oil and gas sector

596,4

32,0

696,2

40,8

- other sector

108,3

5,8

123,7

7.3

Loans and other investments

1161,6

62,2

884,9

51,9

- loans under state guarantee

154,7

8,3

447,3

26,2

-loans without state guarantee

732,9

39,3

298,3

17,5

-oil and gas sector

123,0

6,6

1,1

0,1

- banks

527,4

28,3

141,7

8.3

- others

82,5

4,4

155,5

9,1

- other investments

274,0

14,6

139,3

8.2

In total

1866.3

100.0

1704.8

100.0

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

Main indicators of payment balance

Loans ( incomes )

Debit ( payments )

Balance

1

2

3

4

1

9634491

4808489

4826002

А. CURRENT ACCOUNT

8201866

1895145

6306721

Oil sector

1432625

2913344

-1480719

Other sectors

8546135

1991926

6554209

FOREIGN TRADE BALANCE

8199554

198585

8000969

Oil sector

346581

1793341

-1446760

Other sectors

8546135

8546135

Goods export

8199554

8199554

Oil sector

346581

346581

Other sectors

1991926

-1991926

Goods import

198585

-198585

Oil sector

1793341

-1793341

Other sectors

526558

1049211

-522653

Service balance

364500

-364500

Oil sector

526558

684711

-158153

Other sectors

173562

158126

15436

Transport

191228

257005

-65777

Tourism

16815

12787

4028

Communications

24648

96106

-71458

Construction

15000

-15000

Oil sector

24648

81106

-56458

Other sectors

46

1056

-1010

Financial services

27279

19005

8274

Governmental services

92980

505126

-412146

Other business services

349500

-349500

Oil sector

92980

155626

-62646

Other sectors

176276

1523383

-1347107

Incomes

2312

1332060

-1329748

Oil sector

173964

191323

-17359

Other sectors

385522

243969

141553

CURRENT TRANSFERS

1704808

3508284

-1803476

ACCOUNT OF CAPITAL AND FINANCES MOVEMENT

697356

740295

-42939

Oil sector

1007452

2767989

-1760537

Other sectors

5170

4300

870

ACCOUNT OF CAPITAL MOVEMENT

5170

1150

4020

ACCOUNT OF FINANCES MOVEMENT

3150

-3150

DIRECT INVESTMENTS

1699638

3503984

-1804346

Oil sector

829917

752826

77091

Other sectors

696256

728675

-32419

OIL BONUSES

133661

24151

109510

PORTFOLIO INVESTMENTS

26109

58695

-32586

OTHER INVESTMENTS

843612

2692463

-1848851

Oil sector

1100

11620

-10520

Other sectors

842512

2680843

-1838331

Assets

684

2492566

-2491882

Commercial loans and payments

1228600

-1228600

Loans and borrowings

4

86302

-86298

Deposits and cash currency

680

1177664

-1176984

Liabilities

842928

199897

643031

Commercial loans and payments

52890

52890

Loans and borrowings

745638

199897

545741

Deposits and cash currency

44400

44400

Balancing articles

71154

71154

Other reserve asserts

3093680

-3093680

Balance

11410453

11410453

0

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