WB: Azerbaijan's foreign currency sales decrease due to lower demand

The State Oil Fund of Azerbaijan (SOFAR) sold $278 million in foreign currency in June and this is an 11 per cent decrease from the previous year, due to weaker demand for foreign currency.

This enabled the Central Bank to increase reserves in June (a 2 per cent increase over May) and cover 6.2-month imports, Report informs, quoting the World Bank's (WB) July bulletin on the economic review of Azerbaijan.

"The trade surplus continued to increase as export growth outpaced import growth. Exports more than doubled in May compared to last year, mainly due to energy exports, which increased significantly both in volume and in price. In May, the export price of natural gas rose to $816.6, which is the highest figure in the entire history of observations. Exports of the non-energy sector increased by 10 per cent over the year. On the contrary, imports increased by 26.7 per cent in May in line with the strengthening of domestic demand, resulting in a cumulative import growth of 17 per cent in the first five months of the year. The trade surplus increased to 34.4 per cent of GDP during January-May, which is twice as much as in the same period of 2021," the review says.

The WB also stressed that money transfers in May increased 3.6 times (year-on-year) mainly due to inflows from Russia.

WB economists also drew attention to the amendments to the 2022 state budget, which were approved on June 29.

"It is predicted that revenues will increase by 8.8 per cent in nominal terms compared to previous forecasts. This increase reflects higher projected tax revenues, due to the expected higher activity and higher tax revenues from oil companies, since the base price of oil in the state budget has been increased from $50 to $85 per barrel. Against the background of higher revenue collection, transfers from the State Oil Fund are planned to be reduced by 9.4 per cent. At the same time, budget expenditures were revised upward by 8.1 per cent. More than half of the increase in expenditures will be directed to public investments in connection with reconstruction works, and the rest will go to defence, social protection and food security measures. The deficit of the revised budget is estimated at 2.7 per cent of GDP in 2022," the bulletin says.