TANAP project to receive US$ 1.4 bn in IFI loans
The World Bank approved a US$ 0.8bn loan for the Trans-Anatolian Natural Gas Pipeline (TANAP), which will transport gas from Azerbaijan’s Shah-Deniz field to Turkey and further across the country to Europe. The loan will be allocated 50/50 to Turkey and Azerbaijan. In addition, Asian Infrastructure and Investment Bank (AIIB) approved a US$ 0.6bn loan for TANAP. Earlier, Asian Development Bank approved US$ 1.0bn in private and public sector assistance for the development of Shah-Deniz Stage 2.
Current account posted a US$ 311.4mn deficit in 3Q16
Azerbaijan’s current account posted a US$ 311.4mn deficit in 3Q16, the fourth quarterly deficit in a row. The current account was in surplus (US$ 177.3mn) in 3Q15. The deficit was driven by a 9.6% y/y decline in oil exports and a 12.3% y/y increase in non-oil imports, which led to a narrowing of the trade surplus from US$ 1.5bn in 3Q15 to US$ 1.0bn in 3Q16. Primary and secondary income balances also worsened. The tourism sector moved from a US$ 140.6mn deficit in 3Q15 to a US$ 239.3mn surplus in 3Q16, leading to the general service deficit narrowing from US$ 1.0bn to US$ 0.5bn. However, the improvement in the services balance was not enough to compensate for the deterioration in the other components of the current account balance.
Reserves increased in 3Q16
On the financing side, net FDI almost tripled in 3Q16 to US$ 0.6bn, compared to the same quarter of the previous year, on the back of relatively strong non-oil FDI. Net outflows from portfolio and other investments (P&O) declined from US$ 752.7mn in 3Q15 to US$ 354.5mn in 3Q16 and there was an inflow of US$ 166.8mn from net errors and omissions, compared to an outflow of US$ 2.7bn in 3Q15. As a result of better financing flows, reserves increased marginally (+US$ 62.5mn) in 3Q16, compared to a decline of US$ 2.8bn in 3Q15.
