Azerbaijan to reduce its external public debt

Azerbaijan to reduce its external public debt

Economy
18 October 2019, 14:37 89
Azerbaijan’s President Ilham Aliyev chaired a meeting dedicated to the socio-economic results in the 9 months of 2019 on October 15. The head of state spoke about the progress made in the socio-economic sphere over the past 9 months and highlighted the positive tendencies in various sectors.
 
The Azerbaijani president noted that the country's economic indicators are very positive. "Our external public debt is at a very low level – it accounts for only 17 % of the gross domestic product. According to this indicator, we are in ninth place in the world. I should also note that some countries registering better results than ours are the countries that do not receive any external loans at all. Therefore, their high place does not reflect the objective picture. Thus, we are in a leading position in terms of the low level of external debt on a global scale. I want to say again that I set this task for the government: we must reduce the external public debt every year, and this is provided for in the budget for next year,” said President Ilham Aliyev.
 
The economic meeting chaired by President Ilham Aliyev on October 15 touched upon a number of important issues, MP Tahir Rzayev told Kaspi newspaper. "One of the issues that the head of state highlighted was the issue of reducing the external public debt of our country. President Ilham Aliyev noted that our external public debt was at a very low level – it accounts for only 17 % of the GDP. This is a very low amount on a global scale. The president also reminded us that we must reduce this debt in order to hold one of the leading positions in the world. External public debt is not favorable, again our external public debt is at a very low level, accounting for only 17 % of the GDP. Therefore, our external public debt should not increase. I believe our domestic opportunities can clear our debt, especially through production. I would also like to note that this debt is mainly due to imported products and certain types of equipment. I think this should be eliminated. Azerbaijan is well known throughout the world for the development of its industry, agriculture and other areas. The president also mentioned at the meeting that we are one of the most reformed countries in the world. This shows that there is progress in Azerbaijan and that the ongoing reforms are highly appreciated by international institutions. From this point of view, as Azerbaijan develops socially and economically, the ratio of external public debt to GDP will decline,” the MP noted.
 
Rzayev noted that the reforms carried out have a great positive effect. "Carrying out important reforms eliminates Azerbaijan's dependence on external factors. If we want to eliminate oil dependence and push the development of the non-oil sector, then, of course, we can reduce the amount of external debt by increasing our GDP. Of course, it depends on a well-thought-out policy and the implementation of reforms,” he added. 
 
Economist Mahir Zeynalov said that Azerbaijan's external public debt is about $9 billion, which is a small number compared to the country's economic potential, accounting for only 17% of GDP. "When external public debt accounts for more than half of GDP, then it is considered a cause of concern. The situation in Azerbaijan is better than in most countries. Azerbaijan is a country with high solvency and has a reserve currency of $50 billion, which is 5 times more than its debt. I would also like to note that our external public debt includes direct and guaranteed loans. External public debt consists of loans received from international financial institutions for infrastructure projects and financing programs, as well as securities issued to international financial markets. The government is trying to reduce our external public debt,” he said.
 
Zeynalov stressed that compared to 2018, external public debt decreased by 5%. "In 2018, the ratio of external public debt to GDP decreased from 22.8% to 19%, and this year to 17%. External public loans were received from agencies, such as the World Bank, Asian Development Bank, Islamic Development Bank, European Bank for Reconstruction and Development, and Japan International Cooperation Agency. In the coming years, it is envisaged to take on only direct and guaranteed loans for a number of priority projects. Existing external public debt is expected to decline from $9 billion in 2019 to $4-5 billion by 2025. I would also like to point out that the government’s main objective in public debt management is to achieve a gradual reduction of its debt to GDP ratio, ensuring the sustainability of public debt for the coming years. This calls for the creation of a strategic framework for the management of public debt in the medium term, as well as the selection of the most appropriate financial instruments, taking into account the appropriate balance of costs and risks. By 2020, 2.46 billion manats (including interest expense - 775.4 million manats) will be used to repay public debt, which is 5.3 % more than in 2019. In 2020, the Azerbaijani government plans to receive $559.4 million in external debt. At the same time, despite the relative increase in external debt servicing costs, total debt levels will decrease in the coming years,” he added.
 
BAKHTIYAR