Foreign debt of Azerbaijan in 2018: realities and perspectives

Abstract

Azerbaijani foreign debt reached $9.398 billion USD, or 15.978 billion manat, on January 1st, 2018, according to the Ministry of Finance of the Republic of Azerbaijan. GDP reached 70.135 billion manat in the reporting period, leading the share of foreign debt in Azerbaijani Gross Domestic Production (GDP) to total 22.8%. According to the Ministry of Finance, foreign public debt consists of the direct obligations of the state as well as contingent liabilities emanating from sovereign guarantees. It is comprised of loans from international financial institutions to finance infrastructure projects and programmes, as well as government bonds issued to international financial markets. External public debt is predominantly attracted from the World Bank, Asian Development Bank, Islamic Development Bank, European Bank for Reconstruction and Development, Japanese International Cooperation Agency and other financial institutions to finance projects in the economy. CESD calculations show that the foreign debt of Azerbaijan is higher than the officially reported figure. Based on a survey among CESD’s contacts, it can be shown that Azerbaijani real foreign debt is in the double digits of billions of dollars. That also means that the share of foreign debt in GDP is, in reality, much higher than the official figure.