After having let its currency freely float last December, Azerbaijan imposed capital controls on 20 January 2016 - in the form of a 20% tax on currency outflows related to direct investment, the purchase of real estate or securities abroad – to stem exchange rate depreciation. As social unrest is mounting and the banking sector is heavily exposed to the exchange rate risk, authorities are likely to impose further restrictions to stem currency depreciation. In such a context and considering the considerably reduced volume of foreign exchange reserves, the short-term political risk rating has been downgraded to 4/7.