Russian State Duma deputy Andrei Gurulev has floated the idea of banning the import of Azerbaijani goods into Russia, claiming that Moscow would not lose anything from such a move, while Azerbaijan’s economy would be significantly affected. His remarks have sparked the question: Is Azerbaijan truly economically dependent on Russia, and which country would be more damaged by a halt in mutual trade?
In response, Azerbaijani MP Vugar Bayramov has dismissed Gurulev’s assertion, pointing to official trade statistics from both sides.
Speaking to Azernews, Bayramov argued that the numbers clearly show Russia, not Azerbaijan, would take the bigger hit if trade ties were disrupted.
“In 2024, the trade turnover between Russia and Azerbaijan was $4 billion 799 million. Azerbaijan imported $3 billion 621 million worth of goods from Russia, while we sent $1 billion 178 million worth of goods to Russia. This means that Azerbaijan had a negative balance of $2 billion 443 million in foreign trade with Russia. In other words, Russia earned $2 billion 443 million from trade with Azerbaijan last year alone. Any bans on mutual trade will reduce the volume of currency entering Russia from Azerbaijan. This means that Russian businessmen will suffer more,” Bayramov said.
The MP highlighted that Azerbaijan’s exports to Russia represent just 4.4 per cent of the country’s total exports.
“More than 95 per cent of our $26 billion 338 million in exports go to countries outside Russia. Even if Russia bans imports from Azerbaijan, this will not have a special impact on our country’s export potential,” he noted.
Bayramov also pointed out that remittance flows from Russia to Azerbaijan have been declining sharply, further weakening any economic dependency.
“In 2024, individuals transferred $496 million 753 thousand from Russia to Azerbaijan, which is 53 per cent less than the previous year. Azerbaijan is among the countries in the region with the lowest share of remittances in GDP, less than 3 per cent according to international financial institutions. So, in this direction, Azerbaijan has no dependence on either Russia or any other country,” he stressed.
Concluding his remarks, Bayramov called for more fact-based assessments of bilateral economic ties:
“As it turns out, even Russia's own statistical figures do not confirm what some Duma deputies say about trade with Azerbaijan. You need to look at statistics from time to time, gentlemen.”
As peace negotiations between Azerbaijan and Armenia show renewed momentum, analysts suggest the potential economic dividends for the South Caucasus could be transformative. The prospect of long-term peace is no longer just a diplomatic objective -- it is increasingly seen as a critical economic catalyst for both countries and the wider region.
The most recent high-level meetings between Azerbaijani and Armenian officials signal that the two countries may be inching closer to a comprehensive peace agreement. Analysts argue that the normalization of relations could mark the beginning of a new era, one characterized by economic integration, infrastructure development, and regional connectivity.
According to ING Bank, the potential peace agreement could significantly improve the investment climate in the region. “Further investor interest could be unlocked if the ongoing normalization of relations with Armenia continues,” ING noted in a recent article, emphasizing that peace could open new investment channels, particularly for Azerbaijan.
This view is echoed by Azerbaijani economist and Member of Parliament Vugar Bayramov, who sees the peace process as a key turning point for the South Caucasus economy.
“Normalization will make the region more attractive for foreign investors,” Bayramov said. “Restored communication lines and economic cooperation will bring additional capital into both Azerbaijan and Armenia.”
Bayramov emphasized that regional conflicts have long deterred foreign direct investment (FDI) in the South Caucasus. With hostilities now at an end and normalization gaining traction, highlighted by the constructive tone of recent talks in Abu Dhabi, the region is poised to move forward.
“The end of the conflict removes a major obstacle to economic cooperation,” Bayramov added. “This creates a path for rebuilding trade relations and launching new joint infrastructure projects.”
One of the most anticipated outcomes of the peace process is the possible activation of the Zangezur Corridor, a transit route connecting mainland Azerbaijan with its Nakhchivan exclave through southern Armenia. This corridor would not only enhance bilateral ties but also serve the broader strategy of transforming the South Caucasus into a key logistics hub on the Middle Corridor, which links Europe and Asia via the Caspian Sea and Central Asia.
“Peace will pave the way for the development of regional transport infrastructure, helping integrate the South Caucasus into global trade networks,” Bayramov explained. “It will support the expansion of transport hubs, raise state revenues, and create broader logistics opportunities.”
Bayramov also emphasized the importance of leveraging comparative economic advantages. Both Armenia and Azerbaijan have unique strengths in agriculture, light industry, and niche manufacturing sectors.
“Economic analysis shows that both countries have products with comparative advantages,” Bayramov noted.
“With peace, cross-border trade in these sectors can be restored, benefiting both sides.”
This view is supported by economic expert Khalid Karimli, who pointed out the foundational role of stability in creating a viable investment environment.
“No investor wants to enter an unstable market,” Karimli said. “Peace, stability, and predictability are the baseline requirements for attracting FDI. This process addresses all three.”
While Azerbaijan's total investment in fixed capital reached 8.07 billion manats in the first half of 2025, down slightly by 0.5% year-on-year, the underlying figures reveal a strategic shift. Investment in the non-oil and gas sector surged by 13.5%, even as investment in the oil and gas sector declined by 23.8%.
This aligns with the government’s broader economic diversification strategy, which aims to reduce dependence on hydrocarbons and promote sectors such as industry, agriculture, tourism, and logistics - all areas that would benefit from regional peace.
The peace process between Azerbaijan and Armenia is more than a geopolitical breakthrough - it is a potential economic game-changer for the entire region. By reducing risks, restoring trust, and unlocking new corridors of cooperation, normalization could finally turn the South Caucasus from a zone of tension into a hub of opportunity. If sustained, this peace process could herald a new chapter not only for bilateral relations but also for economic growth, trade integration, and foreign investment across the wider region.
Why is pharmaceutical spending rising so sharply? What does it say about public health trends, price dynamics, and the structure of Azerbaijan’s domestic supply chains? And what can be done to manage the impact on household budgets?
Vugar Bayramov, the member of the Parliament of Azerbaijan underlined that the retail trade turnover increased by 3.8 percent to 23 billion 341 million manats in the first 5 months of 2025. That's the amount of goods and services that are sold to consumers. One of the main points of attention in the structure of retail trade turnover is the cost of pharmaceutical products and medical supplies. Thus, these expenses increased by 18.2 percent compared to the same period of the previous year and exceeded 598 million manats. The increase in spending on pharmaceutical products was at a record level in the retail trade structure during that period, surpassing all other trends. On the other hand, double-digit percentage growth in spending on this direction alone was recorded in the same period. The growth rate for all other spending is in the single digits.
The increase in costs for pharmaceutical products is related to changes in the prices of pharmaceutical preparations, as well as to an increase in the demand for medical services. According to the State Statistics Committee, the price of medical services for consumer goods and paid services provided to the population increased by 4.5 percent in the same period. Prices of medical supplies have also risen. This means that as demand increases, so do the costs of health care. In view of the specific effects of consumer spending on pharmaceutical products on the family budget, it is very important to maintain price equilibrium in this respect. It's true that the prices of pharmaceuticals are regulated. But at the same time, it's important to optimize consumption costs. On the other hand, expanding domestic production and minimizing imports is also important for price and cost balance.
Over the past five years, the ratio of debt burden to disposable income of Azerbaijan's population has increased from 11.5% to 18%, Azerbaijani MP Vugar Bayramov said at a plenary session of parliamen.
He noted that more than 3 million citizens have consumer loans, and there is an average of $8,117 of debt per one economically active resident.
"Last year, the volume of consumer loans increased from 6.937 billion ($4.080 billion) to 8.445 billion manats ($4.967 billion), while the number of problem loans also increased. In the first quarter of this year alone, overdue loans increased from 449.1 million manats ($264.176 million) to 481.6 million manats ($283.294 million). Last year, non-performing loans increased by 41 million manats ($24.117 million) to 655 million manats ($385.294 million). Of this amount, 246 million manats ($144.705 million) are consumer loans, that is, they fall to individuals," Bayramov added.
As of February 1 this year, the number of wage-based employees totaled 1,757,000. Of these, 879,500 worked in the state sector, and 877,500 worked in the non-state sector. Official statistics show that the number of employees on employment contracts decreased by 21,500 compared to January 1. Thus, the employment sector started the year with 1,778,500 employment contracts.
Azernews reports that this information was shared by Vugar Bayramov, a deputy of the Milli Majlis (Parliament) of Azerbaijan, on his social media account.
He noted that the decrease in the number of employees under contract occurred in both the state and private sectors:
“The drop in the private sector was more significant, with a reduction of 18,200 employees. The State Statistics Committee reported a decrease of 3,300 employees in the state sector compared to the previous month.”
Bayramov highlighted that the decline in contracts was mainly driven by changes in the private sector. He explained that the reduction was related to tax breaks for microentrepreneurs, which began on January 1, 2025. Microentrepreneurs with annual revenues under 45,000 manats now receive a 75% tax discount, and the requirement for having at least three employees was removed, leading to fewer labor contracts in the private sector.
While the decrease in the public sector was attributed to structural reforms, the MP stressed that increasing private sector employment is essential for job creation. He also noted that the public sector still dominates in terms of labor contracts, with 2,000 more contracts registered in the state sector compared to the private sector.
“Boosting the private sector's role in employment should be a priority, as it is crucial for driving job creation,” Bayramov concluded.
Protection of labor rights of citizens of pre-retirement age is also very important. Some of our fellow citizens are dismissed shortly before reaching retirement age and then face difficulties in finding employment.
Vugar Bayramov, the member of the Parlaiment, at today's meeting of the Milli Mejlis.
According to him, under the Labor Code of Kazakhstan, except for staff reduction and failure to pass certification, termination of employment contract at the employer's initiative is not allowed for persons who have less than two years left until retirement age.
"Similar practice is applied in several other states. In this regard, it would be expedient that in Azerbaijan too, employers should not be allowed to dismiss citizens who have two years left until retirement. This is important from the perspective of protecting their social rights," Bayramov emphasized.
Azerbaijan’s tourism sector is experiencing a strong resurgence, positioning itself as one of the country's fastest-growing industries. With its rich cultural heritage, diverse landscapes, and strategic location, Azerbaijan continues to attract visitors from around the world. Before the pandemic, the number of foreign tourists exceeded 3 million, and while the sector has made significant progress, surpassing that milestone remains a challenge. From January to November 2024, Azerbaijan recorded 2.4 million visitors—an encouraging 24 per cent increase compared to the previous year. Given this upward trend, it is reasonable to anticipate that Azerbaijan may set a new record in 2025.
However, despite this growth, a persistent trend remains: most foreign tourists rarely venture beyond Baku. Why do visitors overlook Azerbaijan’s regions?
Azerbaijani MP Vugar Bayramov addressed this issue with Azernews, highlighting the stark contrast in tourism preferences.
"In 2024, more than 80 per cent of tourists visiting Azerbaijan preferred the city of Baku. This means that not 2 out of every 10 tourists visiting the country go outside Baku to the regions. Thus, 81.4 per cent of overnight stays by foreigners last year fell to Baku. The second most preferred region by tourists is Gusar. 4.6 per cent of those visiting Azerbaijan stayed in the said region. 4.4 per cent of foreigners preferred hotels in Gabala, 3.9 per cent in Naftalan, 3.2 per cent in Guba, 0.6 per cent in Shabran, and 1.9 per cent in other cities and regions. As can be seen, our regions are still losing out to the capital's hotels in attracting foreign tourists. Although this can be considered normal considering the infrastructure of the capital, the large difference in the number of regional overnight stays is striking. Unfortunately, the regions are still unable to fully present their tourism potential and create difficulties in attracting foreign tourists. On the other hand, most of the price of tourism services in the regions remains high. The quality still lags behind standards.
Overall, the number of overnight stays by foreigners increased by 26.0 per cent compared to 2023 to 2 million 348 thousand. This accounts for 54.8 per cent of the total overnight stays. Of the total number of overnight stays, 19.6 per cent were from India, 13.1 per cent from Russia, 7.8 per cent from Saudi Arabia, 7.3 per cent from Turkey, 5.9 per cent from the United Arab Emirates, 3.8 per cent from the United States, 2.8 per cent from Kazakhstan, 2.8 per cent from Kuwait, 2.6 per cent from Pakistan, 2.4 per cent from the United Kingdom, 2.4 per cent from Israel, 2.2 per cent from Uzbekistan, 2.1 per cent from China, 1.4 per cent from Germany, 1.0 per cent from Italy, 1.0 per cent from Georgia, and 21.8 per cent from other countries."
The preference for Baku is largely due to the capital’s well-developed infrastructure, a wide range of accommodation options, and its reputation as the country’s economic and cultural hub. However, this trend highlights a missed opportunity for regional tourism development. Factors such as high service costs, limited promotion, and an inconsistent quality of tourism facilities continue to hinder the appeal of Azerbaijan’s regions.
If Azerbaijan aims to diversify its tourism sector and encourage visitors to explore beyond Baku, addressing these challenges will be essential. Strengthening infrastructure, improving service standards, and promoting lesser-known destinations could help unlock the full potential of regional tourism, ensuring sustainable and balanced growth across the country.
In recent years, the UAE has emerged as a key partner for Azerbaijan, not only as a market for Azerbaijani businesses but also as a hub for regional investments. Both countries are actively exploring new sectors for joint investment, particularly in renewable energy, technology, and infrastructure development. This growing flow of investment reflects the mutual desire to strengthen bilateral economic and political ties, making the UAE an increasingly important partner for Azerbaijan on the global stage.
Recently, the Central Bank of Azerbaijan reported that from January to September of this year, direct investments from Azerbaijan into the economy of the United Arab Emirates (UAE) amounted to $431 million. This figure represents a 5.4-fold increase compared to the same period in 2023, equivalent to an additional $352 million. This sharp rise signifies a significant strengthening of economic ties between Azerbaijan and the UAE.
The trend of increased investment is expected to continue, with both countries looking to deepen their cooperation in various sectors, further boosting trade and economic growth. Particularly in renewable energy, the two nations have established a special partnership that aims to leverage their respective strengths and resources. This sector is crucial as both countries seek to diversify their energy sources and enhance sustainability.
Speaking to Azernews on the issue, economist Vugar Bayramov said that in recent years, the economic and political relations between Azerbaijan and the United Arab Emirates (UAE) have been expanding. He recalled that not only does Azerbaijan invest in the UAE's economy but also the UAE makes investments in Azerbaijan’s economy.
“Particularly, there has been a special cooperation between the two countries in the field of renewable energy. Naturally, there are both economic and strategic reasons for the increasing share of Azerbaijani investments in the UAE economy,” the economist said.
Vugar Bayramov pointed out that the development of relations between the two countries makes the UAE economy attractive to both state and private companies. As a result, investments are being directed towards the country’s economy.
“On the other hand, the UAE is also considered one of the countries with an attractive economy in terms of profitability. All these factors naturally facilitate the flow of more investments into the UAE economy.
In general, the UAE has become one of the leading countries in terms of attracting foreign investments. The country has attracted a significant amount of foreign investments, which makes it an appealing destination for profit-oriented ventures,” he noted.
Bayramov underlined that there are also political reasons behind this trend. Political relations between the countries are dynamically developing, and this factor influences mutual investments in each other’s economies.
“For Azerbaijan’s economy, foreign investments are beneficial overall. The country not only attracts investments but also directs its investments abroad. Through its investment projects abroad, Azerbaijan can increase its revenues and generate more income. In this regard, managing investments abroad also helps to increase the volume of funds flowing back to the country. Therefore, investments directed abroad, including those in the UAE, represent new sources of income for Azerbaijan’s economy,” V.Bayramov concluded.
In the first two months of 2024, the number of tourists arriving in Azerbaijan climbed by 46.7 percent compared to the same time of the previous year, totaling 341,000 persons, a member of the Azerbaijani Parliament Committee on Economic Policy, Industry, and Entrepreneurship Vugar Bayramov wrote on his social media account.
During this period, the top three countries were neighboring countries: 26.8 percent of tourists came from Russia, 19.9 percent from Türkiye, and 9.8 percent from Iran. 6.9 percent of the total number of tourists were from India, 4.8 percent from Georgia, and 3.4 percent from Saudi Arabia.
"As of 2023, the leader in the number of tourists is China. Compared to the same period last year, the number of arrivals from China increased 4.1 times, Saudi Arabia - 2.8 times, India - 2.7 times, Kyrgyzstan - 2.6 times, Bahrain - 2.5 times, Kazakhstan - 2.4 times, Tajikistan - 2.4 times, Philippines - 2.0 times, Oman - 1.9 times, Spain - 1.9 times, Uzbekistan - 1.9 times, South Korea - 1.9 times, Jordan - 1.8 times, Italy - 1.8 times, Turkmenistan - 1.7 times, Egypt - 1.7 times, Yemen - 1.7 times, Kuwait - 1.6 times, Iran - 1.6 times. The number of arrivals from Arab countries is once again on the rise. The number of arrivals from the Gulf States increased by 1.7 times from January through February this year. The same growth was recorded for tourists from the European Union. The growth of arrivals from CIS countries is relatively small: only 31.4 percent.
Official statistics suggest an increase in the number of immigrants from Gulf countries, particularly Saudi Arabia and Kuwait. In general, the number of tourists increased as the number of flights from Baku increased, as did the number of economy-class flights. At the same time, there is a growth in interest in Azerbaijan's seasonal tourism potential," the publication says.
CESD has finalized the monitoring results of consumer price index (CPI) for February 2024. For the first time in the last 2 years, the price of non-food products in the consumer market has increased more than food products. This is associated with the optimization of food demand and the reduction of import inflation. Annual inflation for non-food products in January and February was 2.7 %. Overall, according to independent monitoring, prices increased by 2.3 %.
Price increases were also observed in the housing market. An increase in the demand for private courtyard houses was observed in February. A 1.8 % price increase was recorded in private houses and plots of land compared to the previous month. Demand in residential buildings and non-residential areas is still stable. 0.4 % monthly price increases were observed in apartments in residential buildings. The price in non-residential areas recorded a monthly price increase of 0.9 %. Prices in the rental market have not changed.
In February 2024, the number of orders in wedding halls increased by only 2.1 %. At the same time, prices in wedding halls increased by 3.8 % in February. Especially the prices of menus up to 40 manats have increased more: 5.1 %. The price of menus with a price of 40-80 % increased by 2.6 %. A 3.7 % increase was recorded in the price of menus with a value of more than 100 manats.
A slight increase in prices was recorded in the car market: 0.9%. Thus, the price of cars up to 30.0 K manats increased by 1.6 % in February. Although the demand for more expensive cars using AI-95 gasoline has decreased, the price of those cars has not changed. As a whole, stagnation continued in the automobile market.
This article analyzes the 12th package of sanctions adopted by the European Union against Russia and its possible impacts on Russian-Azerbaijani economic relations. The importance of the research is that Russia is one of Azerbaijan's main partners in trade relations, and in terms of exports of non-oil sector products, Russia is Azerbaijan's main partner. So far, 11 sanctions packages have been applied against Russia, and the 12th package has already been adopted. As in the 11th package, the list of entities operating in the 3rd country and indirectly contributing to Russia's evasion of sanctions is further expanded and the trade of a number of products is further restricted.
The war between Russia and Ukraine, which began on February 24, 2022, is still ongoing, and as it continues, the European Union is increasing its sanctions against Russia. 10 packages of sanctions against Russia have already been applied and the 11th package has already been prepared. Within the framework of the 10th package of sanctions, restrictions on the export of goods used for the production of weapons and ammunition and other military equipment were applied to 121 legal and physical persons, officials, military officials, 2 more media channels, 3 banks. The sanctions applied so far are showing their results, Europe has already reduced two-thirds of the volume of imports from Russia, which has seriously damaged Russia's income.
Alternative inflation rate for 2022 in Azerbaijan announced
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for 2022. The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the annual inflation rate was 24.6 %. Meanwhile, the official inflation rate for the same period was 13.9 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2023
This paper analyzes the possible effects of the sanctions imposed against Russia as a result of the Russia-Ukraine war on bank transfers and business transfers between the Republic of Azerbaijan and the Russian Federation. The existence of extensive economic relations between Azerbaijan and Russia as a country with more expats from Azerbaijan than any other, and being the main export country for Azerbaijan in the non-oil sector coupled with more than 50% of the volume of remittances of individual persons to the country makes this issue worth necessary...
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first 9 months of 2022 (January-September, 2022). The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the inflation rate was 23.1 %. Meanwhile, the official inflation rate for the same period was 13.4 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first 8 months of 2022 (January-August, 2022). The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the inflation rate was 22.3 %. Meanwhile, the official inflation rate for the same period was 13.2 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
Notwithstanding the ongoing negotiations between Armenia and Azerbaijan with the involvement of international mediators amid peace-building process, recurring tensions reflect the fragility of the process indicating repercussions in a way towards the realization of economic projects. Respective steps for normalization have continued following the trilateral meetings in Brussels as well as in Russia with some decisions adopted, however, no tangible results have been achieved, yet. The peace process should be based on concrete measures without wasting further time.
In a way towards the peace-building process between Armenia and Azerbaijan as well as in the whole South Caucasus region, diplomatic activity in this vein under the auspices of the European Union gains particular momentum. While the EU provides a prospectively viable alternative for the negotiations on the right path, the development of multidimensional issues are envisaged on the verge of Europe that appear to be economically and politically significant.
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first 7 months of 2022 (January-July, 2022). The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the inflation rate was 21.8 %. Meanwhile, the official inflation rate for the same period was 13.0 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
Aside from the public health-related issues, the COVID-19 outbreak deepened existing inequalities and exposed vulnerabilities in social, political, and economic systems. In Azerbaijan, women's participation in the labor market has always been an issue of discussion. Taking into consideration the existing gender pay gap and educational disparities, women's work was mostly concentrated in low waged sectors. The government accelerated the development of small and medium-sized enterprises (SMEs) in Azerbaijan through effectively improved mechanisms and newly established agencies/institutions
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first half of 2022 (January-June, 2022). The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the inflation rate was 19.8 %. Meanwhile, the official inflation rate for the same period was 12.9 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
The European Union recently has been working with key international partners to diversify its energy supplies minimizing the risks to a minimum level and reducing the burden on prices. In the face of the ongoing Russia-Ukraine war that poses severe economic repercussions with obstacles to the energy security of the continental union, the EU is in the way towards the diversification of energy supplies and towards the seek of reliable sources. In this vein, on July 18, 2022 the President of the European Commission Ursula von der Leyen with the President of Azerbaijan Ilham Aliyev signed a new memorandum of Understanding on a Strategic Partnership in the Field of Energy that includes a commitment to double the capacity of the Southern Gas Corridor in the upcoming years.
The sharp strengthening of the dollar continues in the global currency market. The US dollar is strengthening against most basket of currencies. The exchange rate of the euro equaled the dollar for the first time in the last 20 years. Now it was necessary to pay almost 1 dollar to buy 1 euro in the stock exchanges. In the last 1 year, the euro has lost 18 percent of its value. The depreciation of the European currency accelerated after the start of the Russian invasion of Ukraine.
The main reason for the sharp depreciation of the euro is the war in Ukraine. On the other hand, Russia's restriction of gas supplies to Europe and expectations of high inflation in the Eurozone, negative revisions in economic forecasts and a potential crisis in general weaken the euro. Sharp increases in the price of blue gas seriously hamper the development of the real sector in the "old continent".
At the same time, the US Federal Reserve System (FED) sharply increases the interest rate does affect the rate of other basket currencies against the dollar, including the euro. Last month, the FED increased the interest rate by 75 basis points to the range of 1.50-1.75 percent. This was the highest increase since 1994. They do not rule out that the exchange rate in the United States will be increased again in July. Experts say that the discount rate will increase by 1.75 basis points to 3.4 percent by the end of the year.
Although the FED aims for 2 percent inflation this year, the 12-month price increase level is approaching 8.0 percent. This is the highest rate of inflation in the United States in the last 40 years. On the other hand, the growth in the United States GDP was 1.7 percent against the forecast of 2.8 percent. All this forced the FED to go to sharp rate increases. As a result, a sharp strengthening of the dollar is observed.
The depreciation of the euro makes cheaper of European products in dollar terms. It is true that the level of inflation in the Eurozone is quite high. But considering the global inflation rate, a cheap euro also means less expensive European products in dollar terms.
After the start of the Russian-Ukrainian war, the strengthening of the Azerbaijani manat compared to the euro is observed. On February 24 of this year, 1 euro was 1.9115 manats, but now the exchange rate has changed to 1.7060. This means a 12 percent strengthening of the manat compared to the euro over the last 5 months. It should be noted that the exchange rate of the manat to the euro is determined not directly, but crosswise, and as the euro depreciates against the dollar, the Azerbaijani currency strengthens against the European currency.
Meanwhile, after a long time, the European Central Bank is expected to increase the interest rate by 0.25 percent this month. But still, the discount rate in Europe is increased by lower percentage points compared to across the ocean.
The weakening of the euro may affect the cost of products imported from Europe to Azerbaijan. But due to the high level of inflation in the Eurozone, special price reductions in imported goods are not predicted. In addition, it is not excluded that there will be some reductions in the cost of European-made cars.
Regarding the exchange rate of the manat in the context of the strengthening of the dollar in the world market the main economic factors affecting the exchange rate are the amount of currency entering the country, as well as the amount of currency auctioned by the State Oil Fund. However, demand for US dollar in Azerbaijan has been increased, too. Still fix currency regime is used in Azerbaijan. Central Bank of Azerbaijan failed to switch a currency regime to floating one although it was targeted in 2020. A significant part of the demand for currency is paid by the Oil Fund. In this regard, the amount of funds auctioned by the Oil Fund is very important in meeting the demand for dollars. This, of course, is considered important in terms of the exchange rate of the manat. Of course, changes in the exchange rates of the national currencies of our foreign trade partners are also one of the economic factors.
In addition to all this, in practice, the exchange rate of the manat directly depends on the decision of the Central Bank of Azerbaijan. The Central Bank retains the ability to directly intervene in the process. Therefore, against the background of sharp volatility in the global currency market, how the exchange rate of the manat will change will directly depend on the position of the Central Bank of Azerbaijan.
© CESD, 2022
In a way towards increasing limitations in various spheres on Russia to ward off Kremlin’s ability to finance the war by imposing further sanctions, on June 3, 2022 the Council of the European Union adopted 6th package of economic sanctions with a particular focus on restrictive measures for oil imports from Russia by the end of 2022. The latest sanctions are supposed to officially come into force that mainly targeted Russia’s energy sector, banking system and major broadcasters.
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first five months of 2022 (January-May, 2022). The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, the inflation rate was 19.2 %. Meanwhile, the official inflation rate for the same period was 12.6 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for the first four months of 2022. Meanwhile, the center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for the indicated period, was 18.3 %. Meanwhile, the official inflation rate for the same period was 12.4 % according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
The European Union intends to impose an embargo on oil imports from Russia. It is about giving up Russian oil, which pays for 25 percent of imports. If the oil embargo is implemented, it will lead to a sharp decline in Russia's foreign exchange earnings. Thus, crude oil and oil products account for 37% of Russia's exports, and 70% of these products were exported to the US and European markets. Last year, Russia's annual revenue from oil exports to Europe was $ 104 billion.
CESD – the Center for Economic and Social Development – concluded its macro-economic survey results for the first quarter of 2022. According to the State Statistic Committee of Azerbaijan, Gross Domestic Product (GDP) increased by 6.8 % in January-March 2022 compared with the same period of previous year: The CESD’s figure for the same period was 6.1 %...
The meeting between Azerbaijani President Ilham Aliyev and Armenian Prime Minister Nikol Pashinyan in Brussels, mediated by EU Council President Charles Michel, shows that Europe's influence and influence in the region is growing.
The European Union (EU) remains the main trading partner of the region. Thus, the share of the EU in total trade turnover is 36.7 percent in Azerbaijan, 23.9 percent in Georgia and 18.0 percent in Armenia. The year before the pandemic, in 2019, the Union invested 2.6 billion euros in Azerbaijan, 1.2 billion euros in Georgia and 1.0 billion euros in Armenia.
Against the background of the new order in the region and in the world, there is a further increase in EU support for Azerbaijan. In addition to expanding economic ties, the organization plans to provide closer support to Azerbaiian in the demining of the liberated territories, the search for missing persons, as well as in the restoration and construction work.
The last meeting in Brussels also confirmed that the European Union is the most influential body to support the settlement of the conflict. The official position of this influential Union serves to establish peace in the region as soon as possible. On the other hand, both Azerbaijan and Armenia have confidence in Europe in resolving the conflict. This not only expands the opportunities for peace, but also serves to intensify the process. In addition to being one of the world's largest political and economic centers, the European Union, which seeks to be impartial and neutral, has also expanded its sphere of influence in recent years.
Azerbaijan has always attached importance to delaying cooperation with Europe. The deepening of economic relations between Azerbaijan and the European Union, the growing role and importance of the country in shaping the energy security of the old continent, the intensive dialogue and contacts between EU Council President Charles Michel and President Ilham Aliyev and the growing role of the Union in achieving lasting stability in the region. It must be acknowledged that the European Union considers close contacts with the President of Azerbaijan, regular telephone conversations and official dialogues as an important factor in establishing peace and stability in the South Caucasus region.
The results of the last meeting indicate the formation of a new order in the region and its deepening. Neighborhood stability is also important for peace in Europe. The Russian-Ukrainian war has once again confirmed this reality.
@CESD, 2022
Alternative inflation rate for 2021 in Azerbaijan announced
Center for Economic and Social Development (CESD) concluded its macro-economic survey results for 2021. The center has conducted a price calculation survey in 50 districts of Azerbaijan, as well as in Baku, the capital city of the country. CESD uses the same basket and methodology which is officially applied by the State Statistics Committee of Azerbaijan. According to the CESD’s independent calculation of the consumer price index for 2021, the annual inflation rate was 14.8 %. Meanwhile, the official inflation rate for the same period was 6.7% according to the State Statistics Committee of Azerbaijan.
@ CESD, 2022
Fiscal revenues of carbohydrogen rich Azerbaijan is severely dependent on sales of oil, oil products and natural gas. From this point of view the change of oil prices in the global markets is considered as the main indicator for estimating the financial condition of the government. It should be noted that the price of a barrel of oil is estimated to be 45 USD when calculating the state and oil fund budget of the current year.
A New Manat depreciation” panic affected everyone in the country, starting from ordinary citizens to the government officials, businessmen and bank managers. The public panic happened despite the fact that around ten days ago, the head of the Central Bank announced “The currency market has been stabilized, manat has found its equilibrium in the market.
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first eight months of 2017. Both independent and official reports show that GDP declined in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased by 1.1 % in January-August of 2017 compared with the period of 2016 since CESD calculations found out 1.3 % decline in the economy.
Last week, on October 4 th , the budget of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) for 2017 was changed. It should be noted that earlier on June 30 th , state budget revenues increased by 511 million manat, and expenditures by 1 billion 41 million manat, as amended by the law “On the State Budget of the Republic of Azerbaijan for 2017”. Changes
in the budget of the Oil Fund did not cause wide public debate. We suppose that the changes in the document reflect important symptoms for the analysis and forecasting of the government’s current fiscal policy. The question, here is that; whether the Government of Azerbaijan returns to high spending stage?
Well-known “Resources Policy” journal (UK), which indexed by Social Sciences Citation Index, has published the CESD research article
The recent oil price shocks of 2014 resulted in a substantial economic slowdown in the oil-exporting countries of the Caspian Basin, namely Russia, Kazakhstan and Azerbaijan. These resource-reliant countries have encountered a contraction not only in the commodity sector, but also in the non-oil sector due to poor diversification of the economy, and cuts in budget expenditure amid plunging oil prices. By analyzing the underlying causes of the current crisis, this paper concludes that, the economies of these countries are “subsidized economies”, or based on government spending financed by resource windfalls. The non-resource sectors in these oil-exporting countries were poorly developed prior to the crisis and failed to act as an avenue for diversification, lacking the potential to be export-oriented and sustainable. Russia, Kazakhstan, and Azerbaijan need to implement various reforms to support the diversification of the economy, including liberal measures such as eliminating barriers to market entry and promoting competition.
Access to the article is available athttp://www.sciencedirect.com/science/article/pii/S0301420717300326
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first seven months of 2017. Both independent and official reports show that GDP declined in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased by 1.0 % in January-July of 2017 compared with the period of 2016 since CESD calculations found out 1.2 % decline in the economy. The Gross Domestic Product (GDP) made up 37,645 billion manat ($ 20.320 billion US) in the first seven months of 2017.
The State Oil Company of Azerbaijan Republic (SOCAR) reports that the company exported 254,363 thousand tons of crude oil from the Russian port of Novorossiysk and 1,733 million tonnes of crude oil from the Turkish port of Ceyhan in August 2017. Azeri oil price slightly increased in August 2017 compared with the previous month since the price was below $ 50.0 US per barrel in July 2017 Meanwhile, the oil price has been decreased more than 2.2 times since August 2014.
The execution of the State Oil Fund of Azerbaijan’s (SOFAZ) 2016 budget has been approved. According to a Presidential decree, SOFAZ’s revenue was 9.410 billion manat ($5.881 billion USD) and expenditure was 9.022 billion manat ($5.638 billion USD). Initially, SOFAZ’s revenue for 2016 was forecasted as 4.6 billion manat, while expenditure was expected to be 10.7 billion manat. The latest figures show that SOFAZ’s actual income for 2016 was over 2 times higher than forecasted. Meanwhile, SOFAZ’s actual expenditure for 2016 was 15.4% less than forecasted.
The dollar /manat spot exchange rate specifies how much one currency, the US dollar, is currently worth in terms of the other, the manat . On the first of February 2017, the exchange rate of the national currency of Azerbaijan, the manat, hit a new record low; namely, 1 dollar was exchanged for 1.92 manat. Illegal black markets and psychological factors such as a lack of publicly available information and confidence about the real financial situation were the most severe underlying causes, coupled with the ineffectiveness of the implemented monetary, fiscal and exchange rate policies. Overall, the Monetary Authority of the Central Bank of the Republic of Azerbaijan lost its credibility abruptly in financial markets.
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first two months of 2017. Both independent and official reports show that GDP slightly increased in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP increased by 0.4 % in the first two months of 2017 compared with the period of 2016 since CESD calculations found out only 0.1 % growth in the economy.
According to the Central Bank of Azerbaijan (CBA), the external public debt of the country constituted $ 9,017 billion US in January 2017 (http://www.cbar.az/assets/4269/PSI_-_2016_-_son.pdf). CBA has announced that the country’s foreign reserve is 4.1 time more than the total foreign debt. The external public debt consists of direct obligations of the state as well as contingent liabilities emanating from sovereign guarantees. Meanwhile, it should be underlined here that the external public debt is predominantly attracted from the World Bank, Asian Development Bank, Islamic Development Bank, European Bank for Reconstruction and Development, Japanese International Cooperation Agency and other financial institutions to finance projects in the economy as well as the issuance of bonds in the international capital markets.
The State Oil Company of Azerbaijan Republic (SOCAR) reports that the company exported 79,841 thousand tons of crude oil from the Russian port of Novorossiysk, 349,272 thousand tons of crude oil from the Georgian port of Supsa and 1,323 million tonnes of crude oil from the Turkish port of Ceyhan in February 2017. According to the SOCAR’s report 159,777 thousand tons of crude oil were exported from the Russian port of Novorossiysk, 525,382 thousand tons of crude oil from the Georgian port of Supsa and 2,721 million tons of crude oil from the Turkish port of Ceyhan during January-February 2017.
FED’s interest rate: Causes and Implications for Azerbaijan
The decision of the The Federal Reserve System (FED) of the USA has been among the most important economic news during the previous week. That is to say, following the long-term expectations, FED raised interest rates by 0.25 percentage points (making it 0.75%) . The decision of FED, which is to pose a serious impact on the future exchange rate of dollar, has been long waited in Azerbaijan as well.
Azerbaijan Economy in the First Eleven Months of 2016; Brief Overview
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first eleven months in 2016. Both independent and official reports show that GDP continued declining in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased 3.9 % in the first eleven months in 2016 since CESD calculations found out 4.4 % decline in the economy. According to the State Statistic Committee reports, the main reason of economic slowdown was economic decline in the construction sector. The committee has reported that 54.42 billion manat ($ 30.92 billion US, with current official rate) GDP was produced in the indicated period.
Foreign debt in Azerbaijan: realities and perspectives
According to the Ministry of Finance of Azerbaijan Republic, the external public debt of the country constituted $ 7,651 billion US (12,402 billion manat) in October 2016. The ministry has reported that the debt to the Gross Domestic Product (GDP) ratio stands at 20.1 percent. The external public debt consists of direct obligations of the state as well as contingent liabilities emanating from sovereign guarantees.
The CESD calculations show that the foreign debt of Azerbaijan is higher than the figure has reported by the Ministry of Finance of Azerbaijan. Based on the anonymous survey among CESD’s contacts in the government show that Azerbaijani real foreign debt is double digit billions dollar. That also means that the foreign debt’s share in the GDP in reality is higher than the official figure.
The CESD Exclusive Assessment: Causes and Consequences of Rising Utility Prices in Azerbaijan
The regular meeting of the Tariff (Price) Council of the Republic of Azerbaijan held on November 28, 2016 re-examined the sale prices of natural gas, electricity, heating oil, jet fuel. According to the appeal made by the State Oil Company to the Tariff (Price) Council, during recent years large-scale investments have been undertaken to ensure the sustainability of natural gas supply and the quality of service has been improved. Observations show that, in most cases, multi-person households are usually the households with low income due to various reasons and social difficulties. Hence, the social impact of new tariff implementation must be accurately specified and employed criteria must be reconsidered…
Azerbaijan Economy in the First Ten Months of 2016; Brief Overview
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first ten months in 2016. Both independent and official reports show that GDP continued declining in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased 3.7 % in the first ten months in 2016 since CESD calculations found out 4.1 % decline in the economy. According to the State Statistic Committee reports, the main reason of economic slowdown was economic decline in the construction sector. The committee has reported that 49.2 billion manat ($ 24.6 billion US, with current rate) GDP was produced in the indicated period…
Azerbaijani Oil Income in October 2016
The State Oil Company of Azerbaijan Republic (SOCAR) reports that its oil export grew by 45.5% in October 2016 compared with previous month. The SOCAR reports that it exported 2.017 million tons of oil against 1.386 million tons in September, 1.53 million tons in August and 1.924 million tons in July (this year’s best indicator). At that, October’s oil export via Baku-Novorossiysk oil pipeline reached 80,192 tons (versus 169,279 tons in September), Baku-Supsa – 267,643 tons (274,705 tons), and Baku-Tbilisi-Ceyhan (BTC) n.a. Heydar Aliyev oil pipeline – 1.669 million tons (942,882 tons).
Azerbaijan Economy in the First Eight Months of 2016; Brief Overview
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first eight months in 2016. Both independent and official reports show that GDP continued declining in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased 3.1 % in the first eight months in 2016 since CESD calculations found out 3.9 % decline in the economy. According to the State Statistic Committee reports, the main reason of economic slowdown was economic decline in the construction sector. The committee has reported that 38,027 billion manat ($23.32 billion US) GDP was produced in the indicated period.
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first seven months in 2016. Both independent and official reports show that GDP continued declining in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased 3.0 % in the first seven months in 2016 since CESD calculations found out 3.7 % decline in the economy. According to the State Statistic Committee reports, the main reason of economic slowdown was economic decline in the construction sector. The committee has reported that 32.12 billion manat ($ 19.11 billion US) GDP was produced in the indicated period…
It has already been three month since the national currency of the Republic of Azerbaijan continuously loses its value. Since the second half of 2014, due to the fall in oil prices on the world markets, the resulting pressure on the national currency – ‘Manat’ is ongoing nowadays. Overall, Manat lost 49.6% of its value in 2015 and in addition, with more 3% depreciation in the first 7 months of 2016, the losses could reach 52.6%. Although the occurring rapid dollarization and the observed stagnation in the business environment especially in imports in the first months of 2015 and 2016 resulted in short-term reduction in foreign exchange demand in March-May period of this year and strengthening the exchange rate of USD/AZN at the level of 1.49, the process of depreciation proceeded again afterwards. As a result, the national currency increased its annual losses to the level of 3% in June-July, by depreciating 7% against the US dollar again…
As one of the centres of the global economy and financial sector, the exit of Great Britain from European Union made significant impacts on different countries in one way or another, and Azerbaijan was not an exception. This paper analysed the short and long-term impacts of Brexit on Azerbaijan by looking at State Oil Fund of Azerbaijan, UK-Azerbaijan relationship and potential benefits for Azerbaijan. The study found that the impacts of Brexit are difficult to gauge now as the referendum took place quite recently, thus, making it necessary to wait for some time in order to reach conclusion on the effects of this political event on Azerbaijan. However, it was found that Brexit’s impact on the exchange rates of certain currencies is likely to be important for SOFAZ. Moreover, Brexit can also positively affect Azerbaijani businesses and individuals that have or are planning to make a presence in Britain. The paper also discusses the potential impact of Brexit on Azerbaijan-EU relationships because the political event in Britain has many implications for Europe as well…
Foreign state debt of Azerbaijan amounted to 7,449 billion US dollars (11,4867 billion manat) as of April 1, 2016. The ratio of external debt to GDP ratio is 21.0 %. According to the Ministry of Finance of Azerbaijan, debt structure includes direct obligations of the state and contingent liabilities on borrowed loans under the state guarantees. Thus, 82.3% of public debt raised from the World Bank, the Asian Development Bank, Islamic Development Bank, the European Bank for Reconstruction and Development, the Japan International Cooperation Agency and other international financial institutions funding for various projects in the country. 17.7% of the funds raised through the placement of securities in the international financial markets…
The State Oil Company of Azerbaijan Republic (SOCAR) reports that it exported 1.799 million tons of oil in May against 1.449 million tons in April and 1.9 million tons in March 2016. Oil export in May 2016 increased compared with April 2016, however, it decreased compared with March 2016. Azerbaijani oil export increased by 24.2% in May against April 2016 and decreased by 6.0 % compared with March 2016.
Plummeting oil prices since the third quarter of 2014 have shaped new market conditions for the national currency of Azerbaijan. For the first time after the global financial crisis of 2008, the national currency has encountered serious challenges. The Central Bank attempted to preserve the stability of manat exchange rate at the expense of spending currency reserves. Although intervention operations have been initiated since August 2014, only 0.2 billion US dollars in total were spent in September, October and November for this purpose. However, intervention spending has rapidly increased reaching 1.2 billion US dollars in December 2014. During the following 2 months, the Central Bank was forced to take intervention measures of 1.08 and 1.68 billion US dollars respectively. As a result, currency reserves decreased to 11 billion dollars accounting for a 26.6% reduction within 3 months. One of the reasons for large-scale interventions was the society’s perception that devaluation was unavoidable, which thus increased the demand for foreign currency…
In 2015, the Obama administration – in a joint endeavour with the other UN Security Council Permanent Members (UN SC P5) and Germany – drafted an agreement regarding the peaceful resolution of Iran’s nuclear program. The agreement was labelled the Joint Comprehensive Plan of Action (JCPOA). On 8 May 2018, the current US president Donald Trump presented his remarks denouncing the agreement and claiming it “a giant fiction that a murderous regime desired only a peaceful nuclear energy program”. Donald Trump also addressed issues such as Iran’s development of ballistic missiles potentially delivering nuclear warheads to US soil, Iran’s support to insurgency groups in the Middle East (even naming Iran an Al-Qaeda supporter) and Tehran’s increased military spending. In light of Trump’s decision to pull out of the deal, the regional developments surrounding Iran deserve new attention. The decision-makers in Washington started revaluating Iran’s foreign and military policy, which become bolder in its neighbouring regions. Now, Iran’s influence stretches from the Mediterranean Sea coastlines to the Hindu Kush mountains; some consider the recent events in Yemen and Bahrain as Iran-inspired as well. As a testament of Iran’s increased influence, Iranian generals negotiate with Kurdish military groups and present them ultimatums on behalf of the central Iraqi government in Baghdad. The ‘Shia-Crescent’ concept has become a regional geopolitical reality.
CESD – the Center for Economic and Social Development – concluded its macro-economic survey results for the first two months of 2018. According to the State Statistic Committee of Azerbaijan, Gross Domestic Product (GDP) increased by 1.3% in January-February 2018 compared with the same year of previous year: The CESD’ figure for the same period was 0.9%.
The GDP totaled 11.5 billion manat ($6.76 billion USD) in the first two months of 2018. The State Statistics Committee announced non-oil GDP increased by 2.3%, while oil GDP remained the same as in January-February 2017. According CESD’s calculations, it was found that there was a 0.2% decline in the oil GDP of Azerbaijan in the first two months of 2018. Meanwhile, major economic indicators in the banking sector worsened during the beginning of 2018. According to the Central Bank of Azerbaijan, the credit portfolio of Azerbaijani banks was 11.656 billion manat and the portfolio declined by 30.3% by February 2018 compared to the same month of 2017, when the credit portfolio stood at 16.705 billion manat.
CESD- Center for Economic and Social Development concluded its macro-economic survey results for the first nine months of 2017. Both independent and official reports show that GDP declined in the reporting period. According to the State Statistic Committee of Azerbaijan, GDP decreased by 0.6 % in January-September of 2017 compared with the same period of 2016 since CESD calculations found out 1.0 % decline in the economy.
Azerbaijani foreign debt reached $9.398 billion USD, or 15.978 billion manat, on January 1st, 2018, according to the Ministry of Finance of the Republic of Azerbaijan. GDP reached 70.135 billion manat in the reporting period, leading the share of foreign debt in Azerbaijani Gross Domestic Production (GDP) to total 22.8%. According to the Ministry of Finance, foreign public debt consists of the direct obligations of the state as well as contingent liabilities emanating from sovereign guarantees. It is comprised of loans from international financial institutions to finance infrastructure projects and programmes, as well as government bonds issued to international financial markets. External public debt is predominantly attracted from the World Bank, Asian Development Bank, Islamic Development Bank, European Bank for Reconstruction and Development, Japanese International Cooperation Agency and other financial institutions to finance projects in the economy.