2016 budget approved by the President
On December 7, 2015, the President of Azerbaijan approved the budget for 2016 which had passed in parliament on October 20, 2015. The document assumes a US$ 50/bbl oil price and 1.05 US$/AZN exchange rate. Consolidated budget revenues are expected to be AZN 16.7bn (US$ 15.9bn), compared to the 2014 actual figure of AZN 23.0bn (US$ 29.4bn), and expenditures are set at AZN 19.9bn (US$ 19.0bn), compared to the 2014 actual figure of AZN 21.3bn (US$ 27.2bn). Of the resulting AZN 3.2bn deficit (5.5% of GDP), AZN 1.5bn is budgeted to be financed by tapping SOFAZ reserves. Transfers from SOFAZ, which reached AZN 9.3bn (US$ 11.9bn) in 2014, are set at AZN 6.0bn (US$ 5.7bn) in 2016.
SOCAR’s tax payments flat in November 2015
SOCAR’s tax payments to the state budget, which in 2014 accounted for 26.1% of total taxes and 8.1% of consolidated budget revenues, fell 6.2% y/y to AZN 133.6mn in November 2015. Payments remained relatively flat, following a partial recovery from the lows of 1Q15. In 10M15, SOCAR tax payments amounted to AZN 1.4bn (-17.7% y/y).
Restructuring-related decline in loans continued in October 2015
Total loans by commercial banks declined to AZN 18.6bn in October 2015 from AZN 19.1bn in the previous month. According to the central bank, the fall is related to the restructuring process of the major lender in Azerbaijan – International Bank of Azerbaijan. Construction and real estate, along with industry and manufacturing, were the main sectors experiencing a contraction in loans. Excluding state banks, total loans increased 0.2% m/m to AZN 12.2bn. At AZN 1.3bn, the share of non-performing loans to total loans inched slightly down in October 2015 to 7.0%.
Total deposits and deposit dollarization slightly down
With 2.8% m/m increase in AZN demand deposits and 10.0% m/m fall in FX demand deposits, the deposit dollarization ratio retreated to 74.8% in October 2015 (from 75.4% in September 2015). Overall, deposits in AZN terms decreased 1.9% m/m in October 2015.