Republic of Azerbaijan: Financial Sector Assessment Program-Financial System Stability Assessment
IMF Staff Country Reports, April 22, 2025
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- Republic of Azerbaijan: Financial Sector Assessment Program-Financial System Stability Assessment
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Bibliographic details
- Published: April 22, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229008754.002
Macroeconomic and systemic context
- Azerbaijan’s economy has recovered from two downturns prompted by the collapse of global oil prices in 2015 and coronavirus disease 2019 pandemic in 2020.
- An intensification of regional conflicts poses risks to the economy.
- High reliance on oil and gas revenues renders Azerbaijan vulnerable to oil and gas price declines; such declines would impact banks’ asset quality and liquidity.
Key structural risks in the banking sector
- Substantial reliance on volatile wholesale corporate deposits.
- Continued high financial dollarization, particularly in business loans and deposits.
- High credit concentration.
Financial sector resilience and regulatory gaps
- Further measures to strengthen regulation and supervision would reinforce financial sector resilience.
- Long-standing issues identified in previous FSAPs remain relevant and include:
- The need to fully implement a consolidated supervision framework.
- Safeguarding the Central Bank of the Republic of Azerbaijan’s (CBA) independence.
- Establishing an interagency body for crisis preparedness and management.
- Giving the CBA full powers for bank resolution.
Thematic coverage and focus areas
- Anti-money laundering and combating the financing of terrorism (AML/CFT).
- Asset quality and bank stress testing (including bank solvency stress test).
- Emergency liquidity assistance framework.
- Macroprudential policy and financial sector stability.
- Financial system assets and related risk analysis frameworks.
Source: Republic of Azerbaijan: Financial Sector Assessment Program-Financial System Stability Assessment (IMF Staff Country Reports, April 22, 2025).
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