Azerbaijan’s President Ilham Aliyev ordered to set external debt’s upper limit at a maximum of 20 percent of the country’s gross domestic product (GDP).
In addition, the upper limit of the non-oil base deficit of Azerbaijan’s consolidated budget for the medium term should not exceed 20 percent of the country’s non-oil GDP, and specifically 27.5 percent of non-oil GDP for 2022.
The total volume of Azerbaijan’s public debt amounted to 16.9 billion manats ($9.9 billion) or 18.2 percent of GDP as of January 1, 0.2 percent down from a year earlier.
As of January 1, 2021, the country’s total debt amounted to 16.94 billion manats (almost $10 billion) or 23.4 percent of GDP, exceeding previous expectations of 22.7 percent of GDP.
In 2021, 81.8 percent of the public debt accounted for the external debt – $8.2 billion or 14.9 percent of GDP. Domestic debt accounted for 3.3 percent of GDP. The volume of external debt decreased by 7.8 percent, while domestic debt increased by 58 percent.
The bulk of the volume of external debt was made up of direct borrowings from the government – bond issuances and loans from international institutions. Internal debt is generally financed by treasury bill emissions.
According to the government’s strategy on public debt, approved in 2018, the overall debt burden is targeted to decrease by 2026 to $7.7 billion (14.1 percent of GDP), of which $6.5 billion (12 percent of GDP) is slated to be external debt.
Azerbaijan projects a reduction of public debt to $7.7 billion or 14.1 percent of GDP by 2026 amid speed economic development and reforms aimed at investment climate improvement.
The government plans to spend 1.56 billion manats on debt servicing in 2022.