On 6 April, the Asian Development Bank (ADB) delivered its economic forecast for Azerbaijan in 2020.
According to the outlook, Azerbaijan’s economy is expected to grow by 0.5% in 2020, followed by 1.5% in 2021. The ADB also forecasted 2.5% of inflation in 2020, followed by 3.5% in 2021.
When it comes to the budget deficit in the country, the ADB forecasts 3.4% of the GDP in 2020. “The deficit of the state budget of Azerbaijan, including transfers from the State Oil Fund of the Republic of Azerbaijan (SOFAZ), will rise to 3.4% of GDP in 2020 (0.25% of GDP in 2019), as rising social spending and public investment increase total spending by 10.2%,” the statement said. At the same time, according to estimates of ADB analysts, the deficit excluding SOFAZ transfers will amount to 17.2% of GDP.
In 2020, budget revenues, including SOFAZ transfers and the price of oil at $55 per barrel, were projected at 29.4% of GDP. The revenues might be lower if oil prices set in March 2020 continue until the end of the year. “Amendments to the Tax Code, which provide for an increase in tax revenues, provided that transfers from SOFAZ would provide 47% of revenues in 2020 and 45% in 2021. The government predicted that SOFAZ would receive $12.4 billion from oil exports in 2020, 91% of which would be transferred to the budget;” the ADB disclosed.
In addition, ADB considers that given the higher growth rates and debt management policies adopted in 2018, the government expects to reduce the total volume of public and publicly guaranteed external debt to 11% of GDP by 2025. The forecast for state budget revenues for 2020 is $14.2 billion, expenses – $15.8 billion. The state budget deficit for 2020 is projected at $1.6 billion or 3.3 percent of GDP.
The ADB also noted that the Azerbaijani government has allocated $589.4 million from the budget to mitigate the impact of the coronavirus (COVID-19) pandemic on macroeconomic stability, the labor market, and entrepreneurship and added that the government needs to allocate spending more efficiently.
The Asian Development Bank is a regional development bank established on 19 December 1966 to promote social and economic development in Asia. The bank has 68 member states and Azerbaijan joined in 1999. ADB operations in Azerbaijan was guided by the country partnership strategy (CPS), 2014–2018, which supported the diversification of Azerbaijan’s economy, fostering of new economic opportunities, promotion of inclusive growth, and reduction of disparities between urban and rural areas. The ADB supports acceleration of economic diversification and inclusive growth through the implementation of three pillars: 1) boosting private sector development, 2) raising public sector efficiency, and 3) improving infrastructure and strengthening human capital. ADB’s country operations business plan, 2019–2021 is aligned with the Government of Azerbaijan’s Strategic Roadmap on the National Economy Perspective adopted in December 2016. ADB’s indicative sovereign lending program for Azerbaijan over the plan’s period totals $815 million.
The current tally of infected persons in Azerbaijan is 717, with 8 reported deaths.
