The cash basis of accounting was used for the reconciliation of the actual amounts paid by the extractive companies and received by the Government for the year 2015.
The payments reflected in reports submitted by foreign companies were reported in foreign currency. The payments reflected in reports submitted by local companies were reported in local currency. Payments made in United States dollars (“USD”) have been converted to AZN at the average exchange rate according to the Central Bank of the Republic of Azerbaijan (“CBAR”). The average exchange rate of USD to AZN for the year ended 31 December 2015 was 1,0261.1 Since june 2014, the price of oil started to decline rapidly. Such a new condition made it necessary to adapt the currency market and the AZN exchange rate to new oil prices. During 2015, Azerbaijani manat suffered devaluation twice. The first devaluation took place on 21st of February 2015 and 1 US dollar was set to be equal to 1.05 AZN.2 The second devaluation occurred on 21st December 2015 and the official exchange rate of 1 US dollar increased to 1.55 AZN.3 Thus, the total devaluation of the national currency during the reporting period amounted to 98%.
