Gazprombank: Azerbaijan boasts one of highest levels of int’l reserves adequacy in CIS

Despite external risks, Azerbaijan still boasts one of the highest levels of international reserves adequacy in the CIS, said Gulnara Khaidarshina, deputy head of research in Russia’s Gazprombank, chief CIS economist, Report informs.

As of October 1, the country’s international reserves were estimated at $56 billion, approaching 100% of GDP (an estimate accounting for its 5.6% growth last year) and covering 50 months of imports, she noted.

“Assets of the sovereign fund SOFAZ are rising despite external shocks and fiscal stimulus. Due to high hydrocarbon prices, assets held in SOFAZ increased by 0.6% in 1H22 and 4.9% YoY despite stimulatory fiscal policy (the budget deficit for this year is slated at 3.6% of GDP),” she said.

She thinks that favorable hydrocarbon price environment and high external demand are supporting Azerbaijan’s economy.

“The average Brent price is above $100/bbl YTD thanks to compliance with the OPEC+ agreement amid recovery in global demand for hydrocarbons as well as heightened geopolitical risks. In addition, the current oil price is 1.4x above the pre-pandemic level (in 2019, the Brent price averaged $64.2/bbl). It should also be noted that Azerbaijan plans to increase gas exports to Europe by 40% in 2022, which will contribute to greater inflows of export revenues amid high gas prices.”