X
X

Azerbaijan: Baku’s Reserves Rapidly Evaporating Amid Fiscal Storm

Newly installed nodding donkeys pull up crude oil at an oilfield on the Caspian Sea coast west of the Azerbaijani capital Baku in mid January 2008. The country’s State Oil Fund of Azerbaijan (SOFAZ), which received its first investment in 2001, grew to $37.1 billion by Jan. 1, 2015, but has since lost $3.3 billion in the past 12 months. (Photo: Dean C.K. Cox)

With oil prices now barely above $31 per barrel, Azerbaijan’s energy-export economy is taking on lots of water. And what is worse, Baku’s lifeboat, the State Oil Fund of Azerbaijan, appears to be in danger of foundering.
 
The shaky condition of government finances is starting to strain social stability. On January 13, for example, local media reported that police in multiple Azerbaijani regions staged massive shows of force to control protests fueled in large part by rising consumer prices, unemployment and the country’s recent currency devaluation.
 
In the past, the Azerbaijani government had been able to contain discontent by having plenty of cash on hand to funnel into infrastructure initiatives. But now – with oil prices at a near 13-year low, and government reserves quickly dwindling, the state’s ability to use money to paper over problems is increasingly uncertain.
 

To read the full story

Durna Safarova is a freelance reporter who covers Azerbaijan.

Azerbaijan: Baku’s Reserves Rapidly Evaporating Amid Fiscal Storm

1 / 1
X
> <