The possibility of increasing foreign debt of the Republic of Azerbaijan and its consequences

According to the report of the international group Tasnim news agency, citing the media of the Republic of Azerbaijan, On May 23, during the meeting of the Economic Policy, Industry and Entrepreneurship Committee of the National Assembly, during the review of the draft law “On the implementation of the country’s 2023 budget”, the Minister of Finance of the Republic of Azerbaijan Samir Sharif said: Azerbaijan can increase its foreign debt to 10 billion dollars. .

The minister noted: this debt currently amounts to 5.5 billion dollars.

Sharif F emphasized: public foreign debt Azerbaijan is at a relatively low level. We will have payments this year as well. This allows us to carry out conservative foreign currency borrowing and at the same time implement the large infrastructure projects that are in front of our country. reported, but oil production in this country is decreasing. In this case, how reasonable is the increase in foreign borrowing?

Ruft Gholif, a member of the Economic Policy, Industry and Entrepreneurship Committee of the National Assembly of Azerbaijan, told “Turan” news agency: Foreign debt may increase. But if this happens, the loan will be taken at the most favorable interest rate for Azerbaijan. There is such a possibility. If we can borrow on favorable terms against the income we earn from our gold foreign exchange reserves, why not? That means we get 3.5-4.5% of our gold currency reserves which we invest in various stocks and other profitable projects. In this context, if we get a 2% loan, he will spend it on us.

Gholif noted: The government has very big plans. These plans are especially related to Karabagh. We have plans for other projects. We must realize them. Azeri economist Rashad Hasanov told Turan news agency: The connection between the increase in foreign debt and strategic foreign exchange reserves is not the right approach. Because the purpose of using strategic currency reserves is different. The use, storage and conversion of these revenues to the future generations is the existence philosophy of the oil fund, so there is no approach to spend these funds in any direction. These funds can only be directed to the country’s budget through annual transfers and rarely within the framework of various programs.

This expert noted: the use of foreign exchange reserves is not desirable. In this case, the possibility of optimal use of those funds is limited. Control over the use of funds by international organizations is relatively better organized and these funds are spent in a more accountable manner. But if the funds belong to us, the risks of inefficient use of those funds increase. Therefore, it is desirable to attract foreign capital for strategic projects.

Natiq Jafarli, an Azeri economist, also said: This is actually the government’s admission that the country’s income is decreasing and the government cannot Find a way to increase income in the near future. The decrease in oil production and the failure of gas revenue expectations should have at least forced the government to revive the economy in other ways. This is done with the aim of increasing exports and domestic production and increasing the country’s income, but unfortunately we did not see it. Jaafarli emphasized: the country’s income will continue to decrease. At the same time, our expenses are also increasing sharply. It is said that including this year, 14.5 billion manats have been invested in the territories freed from occupation. It is said that an additional 60 billion manats will be needed by 2030. Access to these funds is limited. Therefore, the only way to increase foreign borrowing remains. But it should also be said that the government still has time to act more easily in this direction. Azerbaijan’s foreign debt is at a relatively comfortable level considering European countries.

This economist noted: This process itself is dangerous. As the government seems to have lost hope of increasing Azerbaijan’s income due to domestic resources, domestic production and exports, it has focused its main focus on foreign borrowing. If this trend continues, there is no guarantee that they will not decide to double down on borrowing again in the near future. This means that the people of Azerbaijan will pay more work and taxes not to improve their future, but to repay the foreign debt.

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