None of the net energy exporters is immune to sharp drop in oil prices - even if some have larger buffers to cope with low oil prices than others - as do Azerbaijan, Kazakhstan, Russia, Turkmenistan and Uzbekistan,   all CIS net energy exporters. As a result of lower oil prices (which have rebounded somewhat to USD 61 per barrel end February for the Brent) and sharp currency depreciation in Russia (more than 40% in 2014), Turkmenistan and Azerbaijan devalued their currency by 19% in January 2015 and 33.5% in February 2015 respectively. Kazakhstan, which announced early presidential elections in February, is likely to follow after the vote even if the country has so far resisted devaluing the tenge.

Impact on country risk

The outlook for Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan differs markedly. Azerbaijan and Kazakhstan‘s fiscal balances are projected to be in deficit of 14.5% and 2.3% of GDP in 2015 respectively whereas Turkmenistan and Uzbekistan’s fiscal position is still expected to remain balanced. Kazakhstan has the largest external breakeven prices and is the most transparent country, but also the one with the highest external imbalances (a large external debt and small current account deficit are expected in 2015).
Azerbaijan, Turkmenistan and Uzbekistan have strong external buffers (they are net external creditors) but Turkmenistan and Uzbekistan are still very opaque and centralised economies.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com