$ 5 decline in crude oil price cuts Azerbaijani budget revenues by 63 mln AZN

Baku. 20 October. REPORT.AZ/ According to calculations, crude oil price fall in world market by $ 5/barrel can decrease Azerbaijan's budget revenues by 62.5 mln AZN.

Report informs referring to the draft law "On the state budget for 2018".

Notably, the state financial management of Azerbaijan can face a number of fiscal risks, which depend on external and internal factors: "Decrease in crude oil prices, which is the main export commodity of the country, directly affects the budget through profit tax paid by the State Oil Company of Azerbaijan Republic and the Azerbaijan International Operating Company (AIOC)".

According to calculations, decrease in the crude oil price by $ 5 /barrel would increase budget revenues to 62.5 mln AZN. The change in crude oil prices also affects the consolidated budget through the revenues of the State Oil Fund of Azerbaijan (SOFAZ). Thus, the crude oil price fall by $ 5 can lead to a decrease in SOFAZ revenues by 794 mln. AZN.

The decline in crude oil prices can have a direct negative impact on the balance of payments, reducing the existing positive trade balance: "In case of a deficit in the balance of payments, risk of pressure on the exchange rate may increase. On another hand, reduction of strategic currency reserves as a result of the balance of payments deficit can increase the burden on state budget by affecting the country's international solvency, including interest rates on foreign currency liabilities”.