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Azerbaijan may defer budget cutting through issuing T-bills

27 January 2009 14:16 (UTC +04:00)

If the average oil price is $41 a barrel, the federal budget deficit will reach 3 trillion ruble with the gap widening when oil prices drop further.
That is Russia may have a 4 trillion ruble deficit if the price of Urals crude averages $32 a barrel.
So, Russia has reacted to precede the petrodollar influx drop by adjusting the 2009 state budget oil revenue estimate to the reality.
Russiaâ€™s budget is now poised to slip into the red for the first time in a decade this year after the impact of the oil price decline and global financial crisis.
Tumbling oil prices have also forced many of the richest Persian Gulf states to run budget for the first time in years.
Norway has resorted to the sovereign wealth fund to inject money to keep the economy on its feet.
Meanwhile, OPEC is thinking of mulling oil output cut.
Amid this situation in oil nations, there is a big question mark hanging over the execution of Azerbaijanâ€™s budget without external inflow because the state budget here was built on revenue estimates of oil priced at US$70 a barrel for 2009.
So, there are the first symptoms of an emerging budget deficit expectation in the country when the Ministry of Finance announce placement of AZN 46 million worth of three T-bills issues.
At present the total amount of T-bills in circulation is AZN 210 million for 35 issues.
That is to say, the ministry intends to realize three issues equivalent to 1/5 of 35 issues.
The issue of T-bills is aimed at closing the budget gap, indicating that the current deficit is wider than the predicted.
However, a budget cut is not expected soon and the government doesnâ€™t need to slash budget spending, by not allowing the deficit to get wider.