Azernews.Az

Qabil Ashirov

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Azerbaijan is one of the few countries in the world that runs a trade surplus. In other words, Azerbaijan exports more than it imports, which helps keep its currency stable. However, only a few years after gaining independence, the country experienced a trade deficit. To tell the truth, those years were among the most difficult in its history, as hyperinflation hit the economy and the population faced a currency devaluation. To put this into perspective, in the second year of independence, Azerbaijan ran a trade deficit and encountered hyperinflation. The following year, the country experienced its first major devaluation—its local currency plummeted 17 times, and inflation surged from 1,129 percent to 1,663 percent.

Although the country recovered quickly, the above-mentioned experience left a sour, proverbial taste in the mouths of many. As a result, the balance of foreign trade became a major benchmark for the population. The devaluation in 2025 also confirms this thesis. For instance, in 2015, the trade surplus decreased sixfold, dropping from $12 billion to $2 billion, prompting citizens to rush to currency exchange bureaus. After 21 years, the country faced another devaluation. As an important insight, it’s worth noting that despite a perfect storm — war, COVID-19, and inflation — the country did not experience another devaluation in 2020.

Like in 2015, in the first quarter of the current year, Azerbaijan once again faced a sharp decrease in its trade balance. The trade surplus amounted to $723 million, a threefold drop compared to the same period in previous years. A report from the State Customs Committee provided insight, noting that the sharp increase in imports, from $3.7 billion to $5.7 billion, set the stage for the plummet in the trade surplus. This has raised concerns about whether the same scenario could be repeated.

Speaking to Azernews, economist Eldeniz Amirov noted that the sharp rise in imports is related to the territories liberated from occupation. There are two main factors triggering this increase in imports.

“The first is the factor of ensuring the highest level of national security and defense in order to fully restore Azerbaijan’s sovereignty in these territories. The second reason is the reconstruction and restoration work being carried out in the liberated areas. Undoubtedly, this is a situation that heavily depends on imports, because the successful implementation of both processes requires a higher-quality, more innovative, and financially intensive import process,” the economist underscored.

When asked whether a negative balance in Azerbaijan's foreign trade turnover might be observed in the future, the expert stated that there is no absolute “yes” or “no” answer.

“In all cases, risks are present. A future decrease in oil production costs and a drop in oil prices could make a negative balance inevitable,” Amirov noted.

Regarding the possibility of any changes in the exchange rate of the manat due to a negative balance, the expert noted that he has made statements on this topic before. The Azerbaijani government unequivocally aims to maintain the stability of the manat's exchange rate.

“This is necessary to ensure macroeconomic stability in the country. If the stability of the manat's exchange rate is not preserved, macroeconomic balance could be disrupted, and restoring it could require much higher costs.

That is why the government is trying to maintain the exchange rate by using a portion of its financial resources. I believe the government should continue this approach for a while. Therefore, our country has currency reserves both in the Central Bank and the State Oil Fund, amounting to 71 billion dollars. I believe that the government will be able to maintain this exchange rate stability this year as well. At the very least, our reserves and the current demand for dollars in the country make this possible,” the economist concluded.