Oil crisis threatens Azerbaijan GP (2nd Update)
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| Azerbaijan |
(GMM) Amid swirling rumors, the promoter of F1's newest race said Azerbaijan cannot wait for its inaugural grand prix.
Reports on Thursday suggested some authorities in the country are pushing for the race to be canceled, as the Azerbaijan economy is being battered by the collapsing price of oil.
But race promoter Arif Rahimov on Thursday urged spectators to buy tickets for the race, scheduled in June on the historic streets of the capital Baku.
"We are full of enthusiasm and strongly believe that everyone will get an unforgettable impression of Baku and everything that makes our capital special," he said.
01/21/16 (GMM) Azerbaijan's inaugural grand prix should be in doubt, according to an economist.
The first F1 race on the historic streets of Baku is scheduled for June, but Azerbaijan's economy is currently being battered by the collapsing price of oil.
"Azerbaijan is an oil country," Ali Hasanov, a presidential advisor, told the state news agency Azertac.
"The prices on oil and oil products have reduced threefold since early 2015. This means that Azerbaijan's revenues reduced threefold," he explained.
In the first 21 days of 2016, prices have plunged a further 25 per cent — a figure not seen since the global financial crisis.
In the same period, the Azerbaijan currency has lost 30 per cent of its value, with some predicting that the central bank's reserves will run out within 3 months.
So according to Brazil's UOL, some Azerbaijani authorities are pressing for the cancellation of the grand prix.
"They have to cut the state budget," said economist Natig Jafarly, "as it is currently based on the price of a barrel at 50 dollars."
Currently, the price stands at less than $27 per barrel.
Jafarly added: "The best way to save money at the moment is to cancel the grand prix and the (2017) Islamic Games."
01/15/16 There is trouble in Azerbaijan where the F1 circus is due to make its first appearance in June, on the streets of Baku.
The falling price of oil has put pressure on the manat, the country’s currency, leading to a decision by the Azerbaijan Central Bankto stop supporting the manat after going through half of the country’s foreign currency reserves in an attempt to prop up the manat.
The currency has fallen more than a third in value as a result, which means that everything will cost 30 percent more for the locals.
The result of this has been protests across the country and the arrests of some of the protesters. This may not have any impact on the race fee that Azerbaijan has to pay to the Formula One group, but it may influence the costs involved in staging the race. Joe Saward