Azernews.Az

Azerbaijan has great chances to survive the global economic crisis with the least losses, local media reports referring to the analytical review of the Russian Renaissance Capital investment company.

According to the company, Azerbaijan, along with Russia and Kazakhstan that suffered most of all as a result of the fall in oil prices, has a bigger financial cushion than the countries that are not energy exporters.

Azerbaijan has large budget reserves with a low level of public debt (about 17 percent of GDP), which may support budget spending for at least 10 years even at the price of Brent oil during all this period at $20 per barrel, which, by the way, is not the basic scenario of the company.

Azerbaijan also has the biggest volume of budget reserves. The State Oil Fund of Azerbaijan has a record volume - about 90 percent of GDP.

Azerbaijan has been also characterized by a higher share of the public sector in the economy and the labor market, as well as an initially low level of unemployment (about five percent), a relatively low share of small and medium-sized businesses and the service sector, the most sensitive to quarantine - less than 25 percent and five percent of GDP respectively (the latter include hotels, restaurants, entertainment and other services), said the company.

Azerbaijan also announced the support measures in the form of additional social benefits, tax holidays for the most affected types of services and small and medium-sized businesses, as well as direct costs for mobilizing the health system. This seems to be an adequate response to the crisis at the cost of reasonable budget costs, which, according to Renaissance Capital’s estimates, must not exceed 1-2 percent of GDP.

The debt level of these economies remains moderate, that is, loans to the population account for less than 17 percent of GDP. The total amount of the issued bank loans is less than 20 percent in Azerbaijan, which, in turn, reduces pressure on the economy in terms of credit holidays.