Your trusted source

With Brent crude oil, the benchmark for the oil market, now hovering around $60 a barrel, Baku might well have something to fear. In an interview with Russia’s Rossiya-24 TV channel earlier in December, President Ilham Aliyev admitted that falling oil prices could have a negative impact on the government’s budgetary plans, reports informational – analytic portal EurasiaNet.

As noted in the article one-third of the 2015 budget is slotted for investment projects; 20 percent of those investments are slated to fund a presidential pet project, the May 2015 European Olympic Games in the capital, Baku, economists estimate. Aliyev, however, stated that infrastructure projects could be reduced, if need be.
The industry generates the most economic activity outside of the energy sector, noted economist Samir Aliyev, editor-in-chief of the Economic Forum Magazine, an analytical monthly. “If the government halts such projects now, it will leave lots of people unemployed,” he predicted.

As it is noted in the article, where the price will go in the coming weeks is hard to predict. What is certain is that the Azerbaijani government’s margin for expansive spending is slim.

In comments to EurasiaNet, Oil Fund spokesperson Jamala Aliyeva confirmed that “annual transfers and financing of strategic projects … may cause [a] deficit SOFAZ budget for 2015” as world oil prices decline.

Economist Samir Aliyev claims the Azerbaijani Central Bank’s reserves already have been impacted, too, writes the EurasiaNet and adds that the Bank did not respond to a request for comment in time for publication.

According to economist Natig Jafarli it was necessary to fight corruption, diversify the state budget revenues, encourage small and medium enterprises; however, the government never did that.

“For those who already struggle to make ends meet in Azerbaijan, lower oil prices are a source of unease. Salman Guliyev, 74, who sells candies in one of Baku’s backstreets, worries about what higher prices will mean for his ability to support his disabled wife and himself,” the portal writes.