The state debt of Azerbaijan last year is estimated at 16.939 billion manats or 23.4% of GDP, the Ministry of Finance reports. Considering that in 2019 the state debt amounted to 16.870 billion manats, then this figure, although insignificantly, increased by 0.4%.
Being in debt is always unpleasant. And when they grow, it is doubly unpleasant. When it comes to ordinary citizens, the presence of debt, and even more so its growth, can speak of the financial distress of a particular person, who is losing “creditworthiness,” as they say in society. But if we are talking about the state, then this concept takes on a slightly different character. There is no state today that could boast of the absence of debts, sometimes they even exceed the volume of GDP. At the same time, the state cannot lose its creditworthiness, loans for it can only rise in price and become tougher. And even then for the underdeveloped countries, the developed countries are not yet particularly afraid of the growth of debts, although it cannot be said that they really want this – the circumstances force. But they still try not to get carried away with this, since the consequences of an inflated debt, especially an external one, are clear to everyone.
Azerbaijan should not be afraid in this respect yet. In general, the main criterion for assessing the level and growth rate of external borrowing is not absolute figures, but the ratio of external debt to GDP. According to the estimates of international financial organizations, the threshold when there is a threat to sustainable external debt management is considered to be over 40% of the level of annual GDP. Although for the countries – candidates for EU membership, the maximum amount of external debt is set even at 60% of GDP. But last year’s coronavirus crisis forced many to reconsider this criterion as well.