Tag Archives: Azerbaijan

Azerbaijan’s President dismisses tax code

FEB. 10 2016 (The Conway Bulletin) – Azerbaijani President Ilham Aliyev refused to sign into law a bill that would have imposed a 20% tax on all foreign currency investments, media reported, an apparent U-turn on a much-heralded government strategy unveiled last month to head off a worsening currency crisis. Azerbaijan’s currency lost around half its value in 2015 and the Central Bank has been under pressure to stop businesses cashing out of manat into other currencies. By refusing to sign the bill, though, Mr Aliyev is effectively saying that law- makers and the Central Bank have to re-think their policies.

ENDS

(News report from Issue No. 267, published on Feb. 12 2016)

IMF says Azerbaijan is well placed to deal with economic downturn

FEB. 3 2016 (The Conway Bulletin) – The IMF said it would increase technical support to Azerbaijan after a week-long mission that focused on whether or not to give an emergency loan to help Baku ride out worsening economic conditions.

Concluding its trip to Baku, the IMF mission also said the government was well-placed to deal with the economic downturn.

It made no mention of a potential $4b emergency loan that media had previously reported was being negotiated.

“Looking ahead, economic growth and balance of payments pressures are likely to remain major challenges for the authorities in the near term,” the IMF said in a statement.

Azerbaijan’s economy is reliant on oil exports. Its currency has fallen by a third in the past month, inflation is speeding up and discontent is rising.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Azerbaijan revokes another banking licence

FEB. 2 2016 (The Conway Bulletin) — Azerbaijan’s Central Bank revoked the licence of Texnikabank, one of the country’s largest lenders, and handed back a licence to NBCBank after it said it was looking at a possible merger with a bigger rival.

The moves are part of a wider plan by the Azerbaijani Central Bank to tighten and strengthen Azerbaijan’s commercial banking sector.

The Central Bank said Texnikabank, one of Azerbaijan’s 10 largest banks by assets, did not comply with the minimum capital requirement of 50m manat ($31.3) and the capital adequacy ratio. Texnikabank became the seventh bank in Azerbaijan to lose its licence in the past few weeks.

It later handed NBCBank back its licence after it said that it had entered into negotiations with KredoBank and ParaBank about a possible merger.

Another commercial bank, Caucasus Development Bank, said it intends to merge with Gunay Bank and Atrabank.

Azerbaijan is trying to deal with the fallout from a sharp drop in the price of oil, its main export. This has hit its economy and its currency, the manat, putting increasing pressure on the banking sector.

There are currently 37 commercial banks operating in Azerbaijan.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Azerbaijani soldier dies in N-K

FEB. 4 2016 (The Conway Bulletin) – Azerbaijani officials said that one of its soldiers had died during a shoot- out with Armenian forces in the disputed region of Nagorno-Karabakh. They also said that three Armenian soldiers had died in fighting, a claim that the Armenia backed government of the region denied. A cease-fire between Azerbaijan and Armenia-backed fighters around Nagorno-Karabakh is looking increasingly fragile.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

S+p downgrades Azerbaijan’s debt status

JAN. 29 2016 (The Conway Bulletin) – Ratings agency Standard & Poor’s downgraded Azerbaijan’s debt status to junk and said that its economy would contract for the first time in a decade. The downgrade from BBB- to BB+ comes off the back of a 35% collapse in the value of the Azerbaijani manat, growing internal dissatisfaction and concern over disappearing jobs. Azerbaijan is reliant on oil exports for revenues.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Technip quits Azerbaijan

JAN. 22 2016 (The Conway Bulletin) — French oil service company Technip Maritime Overseas quit Azerbaijan. It didn’t give an explanation about why it had quit Azerbaijan but the collapse in global oil prices could well be the root cause. The company, which has operated in Azerbaijan since 1993, maintains regional headquarters in Turkmenistan and Kazakhstan. Last year it won a consulting contract with TAP, a gas pipeline that will bring gas from Azerbaijan to Italy.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Azerbaijan makes easy visa for Middle East

JAN. 26 2016 (The Conway Bulletin) – Azerbaijan has made it easier for citizens of Qatar, Oman, Saudi Arabia, Bahrain, Kuwait, Japan, China, South Korea, Malaysia, and Singapore to obtain visas by making them available on arrival at airports. Azerbaijan’s foreign ministry said the country wants to promote tourist visits and business relations. In 2010, Azerbaijan scrapped visas- on-arrival for most Western countries.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Zenith ramps up exploration in Azerbaijan

JAN. 27 2016 (The Conway Bulletin) — Toronto-listed Zenith Energy created a subsidiary called Zenith Aran Oil to explore three fields in central Azerbaijan. Current production is low, 350 barrels/day, but the company says the fields have a larger potential. Zenith said the decision to form a subsidiary is “indicative of both Zenith’s long term commitment to Azerbaijan and plans to exclusively focus on the recently acquired fields.”

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

IMF flies to Azerbaijan for talks on $4b loan

JAN. 27 2016, BAKU (The Conway Bulletin) — An IMF delegation flew to Baku for meetings with Azerbaijan’s government over a potential loan to buffer it against a financial storm that now threatens to seriously damage its economy.

The FT newspaper reported that the the loan could hit $4b, although an IMF statement later dodged giving specific numbers.

“An IMF team will be in Baku during Jan. 28 – Feb. 4 for a fact- finding staff visit at the authorities’ request. The team will discuss areas for technical assistance and assess possible financing needs,” it said in a statement.

Azerbaijan’s finance minister, Samir Sharifov, though, played down reports of a loan.

He instead said that Azerbaijan was going to raise $2b by selling debt for the Southern Caucasus Gas Corridor Company, which manages various pipelines, and pipeline projects, running from the Caspian Sea to Europe.

“There is no urgent need for a loan, but we can raise loans to support the economy amid low oil prices,” Mr Sharifov told journalists in Baku of talks with the IMF.

If Azerbaijan did take an IMF loan it would be the first emergency loan given to a sovereign state during this current financial downturn. Taking an IMF loan would also dent Azerbaijan’s pride. Fuelled by high oil prices its economy has boomed over the past 15 years. The government has invested heavily in promoting its reputation as a bridge between the East and West, building grandiose towers and sponsoring major sports events.

But the government has failed to shift Azerbaijan from a petro-econ- omy to a more dynamic economy with several income streams. Instead, Azerbaijan still receives around 95% of its export revenue from oil sales.

And with oil prices at around 12- year-lows this has begun to hurt.

The government has slashed spending, inflation is soaring and jobs are melting away. The manat currency has dropped a third in value in the past month and frustrated ordinary people are beginning to speak out and protest against the government.

A Conway Bulletin correspondent in Baku said people in the streets were increasingly referring to the current economic downturn as a “crisis”.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

Azerbaijan Central Bank closes banks which fail capital stress test

JAN. 27 2016 (The Conway Bulletin) — Azerbaijan’s Central Bank stripped six banks of their licences because they failed to meet newly imposed minimum capital requirements, a strong signal that the authorities want to weed out weaker banks to try to fend off a deepening financial crisis.

The six banks — Ganja Bank, Bank of Azerbaijan, United Credit Bank, NBC Bank, Caucasian Development Bank and Atrabank — all lost their licences in the past 10 days. This leaves just over 30 banks operating in Azerbaijan.

“Banks that don’t meet requirements and have major shortcomings can’t operate in Azerbaijan,” President Ilham Aliyev said in a televised statement, hinting at more closures.

In mid-2012, Azerbaijan’s Central Bank increased by five times the minimum capital requirements for commercial banks from 10m manat to 50m manat (then around $64m, now $31.3m). The deadline for all banks in the country to comply with the new requirements was first set for 2013 and then delayed to end-2015.

For banks, one way to avoid closure and improve financial health is to unite. AGBank and DemirBank signed a protocol to merge last week and Pasha Bank, Kapital Bank and Atabank are in talks to create a single lender, according to Bloomberg.

Last week, ratings agency Moody’s downgraded several of the biggest banks in Azerbaijan, a direct consequence of the negative impact of the manat depreciation. Three of Azerbaijan’s top-10 banks, Xalq Bank, Bank of Baku and Unibank, were among the lenders on Moody’s radar.

With the Azerbaijani manat falling by 35% since Dec. 21, this is a particularly tough time for Azerbaijan’s banking sector and for ordinary people. The IMF has also flown into Baku to potentially offer a loan.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)