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Azerbaijan to allocate $7m to participate in IFI's donor programs

11 February 2020 14:53 (UTC+04:00)
Azerbaijan to allocate $7m to participate in IFI's donor programs

By Rasana Gasimova

Azerbaijan will allocate $7 million to participate in donor programs of international financial institutions in 2020, Finance Minister Samir Sharifov has told local media.

Of this amount, $2 million will be allocated to the European Bank for Reconstruction and Development, $2 million to the Asian Development Fund, and the remaining $3 million will be used as part of a donor program with the World Bank.

Sharifov also noted that the spending on acquiring new shares of the International Bank for Reconstruction and Development will be low.

“A subscription application for IBRD shares is carried out in two ways - about 10 percent is paid in cash, the rest is issued by bills. If necessary, the bank may require payment of bills. Therefore, the cost of acquiring IBRD shares will be low, "he said.

Touching upon revising the state budget for 2020 due to lower oil prices in world markets in recent weeks, Sharifov noted that this is not necessary.

“Oil prices depend on many factors that affect it in different ways. I don’t think that we should panic due to recent events, as the oil price is set at a rather cautious level in the budget,” he said.

The minister emphasized that due to the new rules on the state budget preparation, it is less affected by oil prices.

Sharifov further said that Azerbaijan plans to slightly increase its domestic public debt in 2020 to reduce external debt.

“This year we will continue to work on a phased reduction of the external public debt. Among all other measures, a slight increase in the domestic public debt is also planned,” he stressed.

He also noted that work is underway to change the structure of the debt portfolio.

“Whenever possible, we are trying to repay more expensive loans that were raised at the time of higher interest rates and replace them with cheaper loans. But I would like to emphasize that this happens whenever possible, as a number of lenders set such conditions that oblige the borrower to pay certain fines in case of early repayment of debt. Sometimes these fines are so high that they make it unprofitable to repay the debt early,” Sharifov said.

Note that in 2019, Azerbaijan’s external debt amounted to 17.2 percent of GDP, and in 2020 it can be reduced by 1 percent. In 2020, it is planned to direct 1.7 billion manats ($1 billion) on the service of external debt.

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