Azerbaijan outlines plans to raise $2bn without external aid

Delegations from the two organisations started a visit to Baku on Thursday to discuss support measures for the Azerbaijani economy, including possible loans worth about $4bn.

Azerbaijan, which depends on oil and gas for 95 per cent of its exports, is battling to contain a growing currency crisis and last week imposed capital controls in the form of a 20 per cent export tax on foreign currency.

However, Samir Sharifov, finance minister, told a press conference on Thursday that Azerbaijan’s finances were secure. 

"Azerbaijan does not need loans. On the contrary, the country is a creditor,” he said.

He said that the Southern Gas Corridor company, a joint venture between the sovereign wealth fund and the state oil company, would begin an investor roadshow in the next week with the aim of attracting $2bn in loans that would be guaranteed by the government. The money would help finance the construction of pipelines to take Azerbaijani gas directly to Europe for the first time.

The government aims to raise about 100m manat ($62m) through privatising state assets this year, he added. Earlier, president Ilham Aliyev ordered the government to prepare a privatisation programme.

Mr Sharifov confirmed that the government had discussed the current state of the economy with the IMF. "It is not yet known whether the negotiations will result in any support programme. It is also unknown whether Azerbaijan will resort to any financial support from the IMF,” he said.

The IMF and World Bank both confirmed the discussions of possible financing for the Azerbaijani government, which were first reported by the FT on Wednesday night, although they declined to confirm the amount under discussion.

Azerbaijan’s financial position is objectively strong, and analysts say it could opt to go without IMF support. While the central bank reserves have fallen dramatically in the past year, the country has little debt and a sovereign wealth fund with assets of $34.7bn at the start of October, or more than 60 per cent of GDP.

Nonetheless, the fall in oil prices has strained the economy. Standard & Poor’s, the credit rating agency, is set to review Azerbaijan on Friday and could cut its rating to junk, Mr Sharifov said.

 

(Financial Times)