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Chamber of Accounts puts forward new proposals to reduce Azerbaijan's public debt

25 November 2024 15:42 (UTC +04:00)

“Of the budget deficit projected at 3.1 billion manat next year, 1.8 billion manat is planned to be financed through domestic government borrowing. The increase in domestic debt at the expense of government bonds is ongoing, which is an indicator of the actualization of interest rate risk associated with increasing interest expenses, refinancing risk arising from the need to refinance debt, and liquidity risk associated with attracting sufficient funds in financial markets,” this is reflected in the commentary of the Chamber of Accounts on the draft law "On the State Budget of the Republic of Azerbaijan for 2025", APA-Economics reports.

It was noted that the fact that interest expenses on debt service were projected to be 308 million manat higher than last year, the predominance of short-term debts observed in the domestic debt portfolio, and the different dynamics in the average yield of government bonds indicate that it is important to pay special attention to this risk factor.

“Based on the performance indicators for the first 10 months of the current year, state budget revenues exceed expenditures by 3 billion manat, which creates expectations of significant budget surpluses by the end of the year. We propose that an enforcement mechanism be created to pay overdue obligations directly from the free balance. In addition, the issue of avoiding the use of borrowing in a surplus budget environment and the early redemption of short-term bonds from investors, taking into account monetary policy objectives, may also be revised. These circumstances I have mentioned will not only reduce the size of the state debt, but also create opportunities to prevent a significant increase in interest costs in the coming years,” it was noted.