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UPDATE 1-Azerbaijan talks aid with IMF, plans to revise budget
January 28, 2016 / 3:20 PM / 2 years ago

UPDATE 1-Azerbaijan talks aid with IMF, plans to revise budget

(Adds more comments, info, details, background)

By Nailia Bagirova

BAKU, Jan 28 (Reuters) - Azerbaijan held talks with a visiting International Monetary Fund mission on Thursday about possible financial aid, the country’s finance minister said, after a source told Reuters Baku was looking for $3 billion in IMF assistance.

Samir Sharifov, the finance minister, said the government also planned to revise the budget, halving the oil price it is based upon to just $25, as the ex-Soviet state scrambles to reorder its public finances in the face of low commodity prices.

The government relies on oil and gas exports to cover 75 percent of its revenues and the sharp fall in oil prices has prompted its currency, the manat, to tumble, and put serious pressure on the budget.

“There is no urgent need for a loan, but we can raise loans to support the economy amid low oil prices,” Sharifov told a news conference.

The government plans to ask the IMF for $3 billion in financial aid and will request a further $1 billion in World Bank loans, a source familiar with the matter told Reuters on Thursday.

The IMF said on Wednesday it was discussing financial help for Azerbaijan with the World Bank to help it cope with mounting currency pressures.

Azerbaijan in December floated the manat, after burning through more than half its foreign exchange reserves last year. The manat has continued to lose value, falling by more than a third against the dollar in the past month alone, triggering a steep spike in inflation.

Azerbaijan’s central bank said it sold a total of $113 million on the foreign exchange market on Thursday to support the manat.

The government had already revised its annual inflation rate forecast for 2016 up to 10-12 percent from a previous 3.3 percent. Azerbaijan’s consumer prices grew by 4 percent in 2015.

Sharifov said Azerbaijan’s Southern Gas Corridor company planned to place $2 billion in bonds on international financial markets in the first half of February.

Road shows were planned for Europe and the United States, he said.

The company runs a gas pipeline stretching from Azerbaijan through Turkey to Europe, which is designed to deliver gas from Azerbaijan’s major Shah Deniz gas field. (Writing by Margarita Antidze; Editing by Andrew Osborn)

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