You might not think that money from oil would be a problem for Azerbaijan, one of the former Soviet Union’s largest energy producers. But when oil production drops, and election-year demands for money increase, the picture changes.
Next year, for the first time in its history, the country’s State Oil Fund will post a multi-billion-dollar deficit. For economists, the question is what to do about it.
Azerbaijan’s 2013 budget, passed on November 30, is expected to increase by roughly 12 percent to 19.15 billion manats or $24.4 billion. As it has since 2009, the State Oil Fund (SOFAZ), which oversees investment of the country’s oil revenues, will provide the lion’s share (59.3 percent) of that sum, via a direct transfer of 11.4 billion manats, or $14.5 billion.
Given Azerbaijan’s petroleum prowess, that role may come as no surprise. Except that, with its oil production tapering off (down by 7.8 percent, compared with 2011, according to the State Oil Company of the Azerbaijani Republic), Azerbaijan had been expected to draw less on SOFAZ and more on the non-energy sector of its $93.05-billion economy.
To read the full story
Shahin Abbasov is a freelance reporter based in Baku.