19.Jan .2021 00:00

Balance of Payments of Azerbaijan Close to Equilibrium

Balance of Payments of Azerbaijan Close to Equilibrium
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On the backdrop of unfavorable external environment current account (CAB), the main component of the balance of payments of Azerbaijan was close to equilibrium. Changes in export prices weighed in on the balance of payments (BoP). Over the period non-oil CAB kept improving. Low import of non-oil goods and services had a balancing effect on the BoP.
Current account deficit amounted to $208.3M (0.7% of GDP) over 9 months of 2020 (y/y surplus amounted to $4B). Oil and gas current account surplus y/y decreased by 2.3 times ($5.2B) to $4B, while non-oil current account deficit decreased by 19.1% ($1B) to $4.2B, the recent data of the Central Bank of Azerbaijan reports. 
External trade balance made up $17.2B, $7.2B worth oil-gas surplus covered $4.8B non-oil deficit, resulting in $2.4B worth positive external trade balance (y/y down by 2.9 times). Azerbaijan traded with 186 countries – CIS countries account for 16%, while other countries for 84.0% of foreign trade.
Commodity export amounted to $9.8 B (down by 35%). Oil-gas export decreased by 37.5% to $8.5B (due to 11% drop in oil extraction and 35.2% slump in crude oil prices in global markets to average annual $41.6/barrel over 9 months of 2020). Crude oil accounts for $6.5B and oil processing products of $0.3B of exported oil products ($6.8B). Non-oil export decreased by 9.3% to $1.2B.
Commodity import y/y decreased by 8.7% to $7.4B, total value of imported consumer goods amounted to $3.2B (including $1.1B worth food products). Non-oil import decreased by 11% to $6.1B: import of butter (29.8%), vegetables (14.2%), automobiles (5.5%) and paper products (2.5%) increased and import of railway vehicles (3.8 times), tobacco and products (29.7%), furniture (28.2%), metals (16.2%), chemicals (15.2%), stone and glass ware (10.7%), cereals (10%), alcoholic and non-alcoholic beverages (10.6%), sugar (4.4%), wood ware (4%) decreased. The share of vehicles, equipment and goods imported via foreign investments was 7.6% ($0.6B).
Total FDI liabilities amounted to $3.4B (up by 27%). The oil-gas sector accounts for 85.3% of FDIs.
Drop in net financial liabilities ($-509.7M) on the oil-gas sector of the BoP’s direct investments item stems from the difference between attracted investments ($2893.4M) and capital repatriation ($3403.1M).
Total amount of FDIs liabilities to the non-oil sector is estimated to equal $497.1M (up by 18%).
Receipts on portfolio investments made $0.2B, payments made $0.5B, resulting in $0.3B negative surplus.
Assets on portfolio investments mainly decreased due to banks and the public sector, while liabilities decreased due to the oil and gas sector.
Net financial assets on loans decreased by $2.4M, while net financial liabilities decreased by $708.3M. Net financial liabilities on loans decreased at the expense of direct government loans ($137.6M), government guaranteed loans ($176.5M), bank loans ($29.7M), loans of the oil and gas sector ($279.8 M) and loans of companies and other enterprises ($84.7M).
Net financial assets on currency and deposits increased by $100.9M, while net financial liabilities decreased by $415.3M.
Over 9 months of 2020 Azerbaijan’s reserve decreased by $1.8B.